or “put innovation off ” for a rainy day. Innovation is a constant transformation, a fluid state—and it needs to be nurtured to succeed. There’s a significant danger in thinking you’ve “completed transformation” into an “innovative company,” as if it’s a one-time, singular event or something that only takes place when change is afoot (then again, if you’ve been reading closely, you know change is always afoot). This flawed view of what innovation is and how it works can lead to stagnation, just as success can.
As Andy Grove, former CEO of Intel famously said, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.”38 We don’t want future generations looking back in the rearview mirror at all these changes—which will be slow paced to them—and see us sitting there twiddling our thumbs. What’s happening now will one day seem like one archaic system that was replaced by another archaic system, just as those from a couple of centuries ago look archaic to us.
For example, most people were far from thrilled about cars when they first became available to the public. States passed all sorts of laws to impede their progress, including Vermont, which required that someone walk in front of a moving car while waving a red flag.39 If you think gridlock is bad now in some of the world’s biggest cities, imagine if every car needed a person to usher it through the streets. Other cities took an even more radical approach and banned cars altogether. Then there were groups like the Farmers’ Anti-Automobile Society of Pennsylvania that suggested state laws involving an elaborate system of sending up roman candle rockets as cars drove through the night, whose drivers were also supposed to pull over and cover their cars in blankets or some type of camouflage when passing horses in an effort not to spook them.40 I don’t think any of those made it into law.
It’s funny now, but who knows what people will be laughing at in the future, considering our current era as just another quaint time period. Commuter drones, for example, are already being developed by Boeing and Airbus, and dozens of other companies are joining the competition.41 Someday soon, you may see your next-door neighbors seamlessly carpooling together on drones while you’re stuck in traffic, puttering along the highway, late to work. Sounds hard to believe? Take it from Henry Ford, who all the way back in 1940 said, “Mark my words. A combination of airplane and motorcar is coming. You may smile. But it will come.”42
For leaders and managers, part of the job description must now be to relentlessly communicate today’s urgency across all functions in the organization. You must be radically transparent with everyone, including yourself, about the challenges and opportunities of the Fourth Industrial Revolution, and how your organization is affected by it. No matter if you are a board member, top executive, middle manager, or shift supervisor, it is your job to get everyone on your team to pay attention and take change seriously. Whenever you have an audience—whether it’s your boss, a bureaucratic committee of some kind, or the entire employee community—you must reiterate that no one can afford to continue the status quo, regardless of how comfortable that is.
Consistently showing your teams that you are serious about innovation will have a tremendous impact on your organization, but proving that it’s necessary for survival will be even stronger. Managers and leaders should be measured on ensuring that innovation is seen as a constant priority throughout the organization. In doing so, their companies will remain relevant and meet today’s, and the future’s, opportunities and challenges.
Case Study: LEGO
My five-year-old son Matthew is crazy about his LEGOs. I find them all over the house—the living room, his bedroom, the kitchen, the bathroom (specifically the bathtub, which came with a $90 bill from a plumber)—there seems to be an endless supply. Matthew’s favorite pastime is to put them together in all sorts of shapes with my wife, Maria. Needless to say, LEGOs are high on my personal radar, mostly as walking hazards covering the floor. But there’s another reason I’m interested in them. LEGO is a great example of a company that intimately understands that innovation is always constant, urgent, and time-sensitive.
It may seem ironic that with all this talk of the technological advances of the Fourth Industrial Revolution and the changing world around us, LEGO—whose flagship interlocking plastic bricks began production in 1949—is a prime example of these principles. Before you jump to conclusions, consider that children around the world spend 5 billion hours a year playing with LEGO bricks.43 Since 1949, more than 400 billion of these bricks have been produced. As for their minifigures, they sell 3.9 of them per second, every day of the year. That adds up to over 122 million of these little guys and girls annually. If that doesn’t pique your interest, then this will: in 2018, in opposition of toy industry trends, LEGO increased its market share in all major markets, with its revenue growing 4 percent to around $5.5 billion.44 Oh, and Ryan of Ryan ToysReview reportedly loves LEGOs as well.45 Coincidence?
In 2003, with LEGO on the verge of bankruptcy, no one would have guessed that the company would be reporting such strong earnings or be dubbed “the Apple of toys” sixteen years later.46 Facing major competition in the 1990s from a new wave of video games and computers, paired with shrinking independent toy stores around the world, LEGO took the “ignore it” approach, hiding behind a false confidence in what the company termed its “classic market” position and failing to take action or even admit that the industry was being disrupted.47
In time, leaders across LEGO started to realize that if they wanted the company, and their jobs, to survive, a new approach was necessary. As Christian Majgaard, a former LEGO executive and Head of Global Brand and Business Development put it, “We said, ‘We want to be the world’s most powerful brand among families and children.’ That’s the new starting point.”48 They set off on a path of open innovation, engaging their customers unlike ever before. The R&D Future Lab team was established and tasked with developing low-risk, low-cost minimum viable prototypes that could quickly be created and tested. Contrary to the way typical companies work, the team shared early prototypes with customers and pivoted based on the feedback, before making any substantial investments in new products.
Most importantly, R&D co-innovated with their end customers through an online platform where consumers were encouraged to share, and vote for, additions to the company’s product line. This feedback created a more customer-centric experience, up-to-date with current trends, and resulted in new lines such as LEGO Architecture, popular with adults, and LEGO friends, which turned out to be one of LEGO’s biggest successes in the company’s history.49
The company also began developing partnerships and strategic alliances with Hollywood movie companies. Where Star Wars action figures were once a competitor, they now had their own line. Taking a more holistic view of what their customers wanted, and what LEGO could become, they started opening amusement parks and exhibitions. These were big, bold steps, but even seemingly small changes like a more user-friendly website contributed to their success.
They were forced into action to innovate once, but since then they’ve respected the urgency and continuity of innovation almost as the word of law. Open innovation has become the party line at LEGO. The Future Lab is now focused on even more forward-looking initiatives, tasked with inventing new, technologically enhanced “play experiences” around the world.50 They’ve made inroads into China, partnering with the Tencent Internet company, creating opportunities to experiment with digital technologies and a growing consumer base. They’re still producing and selling their iconic blocks, but they’re also trying out mobile apps and playing with the integration of physical toys and the digital world. Sounds pretty Fourth Industrial Revolution, no?
Summary: Innovation Waits for No One
If innovation is not top of mind, then you’re going to be left behind. Today’s unicorns can easily become tomorrow’s
