There's only so much we can optimize existing structures and resources before we get to the end of our runway. In business as in nature growth comes from innovating. Because it moves us from a scarcity mindset to one of abundance, innovation leads to breakthroughs towards where we want to go even as we may not know how to get here.
Peter Diamandis and Steve Kotler say the future is better than we think. Which is good news in a cycle of seemingly unending global economic and environmental crises. In Abundance they make the case for why innovation is part of the human drive. Based on what motivates us, there are four main forces:
1. Curiosity, which is the weakest of all—the desire to find out the reason for things, to open the black box, to see around the next corner are part of the mechanism that stimulates the brain to seek novelty. It powers much of our early development and growth, and science research.
2. Fear fuels risks-taking—John F. Kennedy's Apollo program is an example of innovation sought at significant peril and expense in response to early Soviet space success.
We can get an idea of the ballpark ratio between curiosity and fear as a driver by tabulating how much we spend in science research in the U.S.—$30 billion at the time of the book writing—and the defense budget—which in 2011 was roughly $700 billion.
3. Wealth, the desire to create more—the best example of this is the venture capital industry's backing where the ratio between funding and success is ten to one, with nine ideas failing to take off and a big payoff of one grand-slam winner.
4. Significance, or the desire to do something that makes a difference—many set out to change the world, to leave a legacy of our work.
To create an incentive for innovation we want to harness these natural human motivators.
Since we're wired to compete, to hit hard targets, one tool that harnesses all four forces is the incentive prize. “Incentive prizes are a proven way to entice the smartest people in the world, no matter where they live or where they're employed, to work on your particular problem.”
Charles A. Lindbergh's flight across the Atlantic was in response to such a competition to be the first to go non stop from Paris to New York or New York to Paris for a prize of $25,000. The distance was almost double the longest non stop flight in 1919—3,600 miles. The five years to claim the sum passed without a winner. So Raymond Orteig, the hotels owner who moved to the U.S. from France renewed the offer for five more years.
Lindbergh was not the first to attempt such a feat, nor he was the most experienced. In the summer of 1926, Charles Clavier and Jacob Islamoff died when their plane ripped apart at takeoff due to its weight. Commander Noel Davis and Lieutenant Stanton Wooster died during the final test flight in 1927. In the same year, French aviators Charles Nungesser and Francois Coli flew westward and disappeared.
At that point, no aircraft manufacturer wanted to have any part of it for fear of bad reputation. Everyone in the media dismissed Lindbergh, calling his the “flying fool.” But since the competition was open to anyone, he entered for the prize. On May 20, 1927 Lindbergh took off from the Roosevelt Field in New York and after thirty-three hours and thirty minutes he landed at Le Bourget Airdrome outside Paris.
He had accomplished the feat alone. But he had done it, and the world learned about it. All the attention opened the door to possibility and daredevils and barnstormers turned into pilots and passengers increasing demand for flights by 30 percent—from 6,000 to 180,000, with associated growth in the ranks of pilots and the manufacturing of airplanes.
“Lindbergh's flight was so dramatic that it changed how the world thought about flight. He made it popular with consumers and investors. We can draw a direct connection between his winning of the Orteig Prize and today's three-hundred-million-dollar aviation industry.”
Nine teams had spent $400,000 to try and win a $25,000 prize, sixteen times more, as detailed in The Spirit of St. Louis by Lindbergh himself. Orteig paid only the winner. His competition created so much buzz that it led to launching a whole industry.
Creating a competition with a fixed prize and a limited time frame engages curiosity, fear, the desire to create wealth for oneself, and to make a difference.
Taking the challenge to the world
To find another example of innovative competition, we go from the sky to underground, from “flying fool” to what everyone thought was judged as “fool's gold.”
Rob McEwen is the former chairman and CEO of Goldcorp, Inc. His mine was in the Red Lake district of northwestern Ontario, a site that had produced more than 24 million ounces of fold since the 1920s. Which made it about 10 percent of Canada's total output. But the property had not produced much in years.
McEwen gave his geologists $10 million to explore the mine that was just 1,300 miles outside the company's Toronto's headquarters. Nine of the sites from exploratory drills returned a richer concentration than current production at Red Lakes, which was good news. But that left open some big questions of where to explore and how much it would cost.
After more than a year trying to figure it our, McEwen spent a week at MIT to learn about advancements in technology with peer CEOs. One of the week's topics, say Bill Taylor and Polly LaBarre in Mavericks at Work, was Linux open-source software. He learned that programs that formed the backbone of the Internet like Apache, Perl, and Sendmail had all been open-source.
So he got an idea—why not have people all over the world work with Goldcorp to explore the Red Lake mine?
The idea was to post all of the company's data on the mine—50 years worth of maps, reports, and raw geological information—along with software that displayed the data both in two dimensions and three dimensions. It would then invite scientists and engineers from anywhere in the world to download the data, analyze it as they saw fit, and submit drilling plans to Goldcorp, which would convene a blue-ribbon panel of judges to evaluate the submissions.
The goal would be to help the company find its next 6 million ounces of gold (an arbitrary number higher than the current 3 million ounces).
The prize was set at $500,000 to be divided among 25 semifinalists and 3 finalists chosen by the judges. Many executives at the company thought this was a big risk, someone could buy the land around the site, or maybe they would take a hit on reputation. McEwen addressed the company's geologists concerns—Goldcorp would not divulge the location of promising sites to see what others would find.
More than 1,400 “online prospectors” downloaded the data and more than 140 crunched the numbers and submitted detailed drilling plans. The best part came when they compared the award-winning submissions with Goldcorp's identified targets and they found that more than half were pointing to new sites.
What McEwan discovered running the challenge was that there are many disciplines and pathways to solving a problem—people used applied math, advanced physics, intelligent systems, and computer graphics. The challenge was a pivotal event in the history of the company.
In Abundance Diamandis and Kotler list other ways to harness the four motivators that drive innovation—the power of small groups, and the power of constraints.
Anthropologist Margaret Mead says, “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.” With the commitment comes accountability and that is what makes a small team most motivated.
At a company's offsite meeting where Amazon employees talked about the need to communicate more, CEO Jeff Bezos used the famous two-pizza teams example to emphasize the need for higher accountability instead. When 5-7 people are responsible for managing a project, communication is much easier day to day.
Some of Amazon's most popular features were conceived by two-pizza teams—the Gold Box, a small animated icon of a treasure chest that used to wobble at the top of Amazon's home page with special offers (now the new & interesting finds), and the Bottom of the Page Deals (now today's deals).
Amazon used a single key business metric agreed by senior leadership and the team as its fitness metric to measure performance. While the company may not use this same method, it still considers accountability, autonomy, and ownership core to its business.
Team size is one example of constraints. Other limiting factors include project scope, time limits, and fixed prize winner. In a world filled with abundance of choices and connections, such constraints help us focus on what matters most, engaging creativity.
But there is another important way to think about constraints—good organizations that have good strategies learn to embrace the constraints they have. Innovators by definition break constraints. When Goldcorp made its data available to anyone in the world, they broke the old company's rules. They payoff was they hit pay dirt.
The difference between strategy and innovation is a major reason why innovative teams usually start small. The nature of physical constraints is however not limiting to human ingenuity and imagination—especially when grounded in a multidisciplinary approach.
Curiosity, fear, greed, and significance are the four natural motivators that drive innovation. Incentive competitions are the perfect construct to invite small teams to both embrace defined rules and break the constraints dictated by habit to open the door for breakthroughs.