2021 has been a remarkable year for Pakistani startups as far as investments are concerned. In the whole of 2020, Pakistani startups had received an investment of $77 million whereas in just 8 months of 2021, investments in Pakistani startups have crossed $228 million according to Ignite. That is a growth of almost 3 times over 2020 with another 4 months still to go. If the momentum continues like this for the next couple of years, annual investments in Pakistani startups can reach billion dollars by 2025.

According to CEO Ignite, Asim Shahryar Husain, “Over the last five years or more, government, academia, and industry have launched many incubators which have produced more than a thousand startups in different verticals. Many of these startups are generating revenue and are ready for acceleration. When you have leading VCs like Kleiner Perkins and 20VC investing in Pakistani startups, then it means that you are getting ready for the global stage. Pakistani startups are the next big thing and many are ready for acceleration and lift-off now.”

Ignite is planning both horizontal and vertical expansion of its flagship National Incubation Centers (NICs) in future. Presently, Ignite has launched NICs in Islamabad, Lahore, Karachi, Peshawar, and Quetta. In future, Ignite will be launching new incubators in Faisalabad, Hyderabad, Multan and other cities of Pakistan. Also, Ignite will launch specialized incubators in verticals such as gaming & animation, aerospace, healthtech, etc. for incubation of startups in these areas.

Sectors which are attracting investment include ecommerce, transport/logistics, fintech, healthech, retailtech, and edtech. So far, 37 Pakistani startups have raised funding of $228 million this year. Five of them have raised more than $10 million dollars each including Airlift (ecommerce), Cheetay (logistics), Tajir (retailtech), Educative (edtech), and Finja (fintech) in series A and series B funding this year. A shift towards series A and B funding by many startups shows that they are growing and planning national and international expansion of their operations. Average deal size has grown by more than 3 times from $1.2 million in 2020 to around $4 million this year.

Leading international venture capitalists which have invested in Pakistani startups this year include Kleiner Perkins, Prosus, 20VC, Buckley Ventures, Y Combinator, 500 Startups, Next Billion Ventures, SparkLabs, Golden Gate Ventures, Hustle Fund, First Round Capital, Draper Associates, Global Founders Capital, Raptor Group, MSA Capital, Shorooq Partners, Visa, and Stripe. Leading local investors include Indus Valley Capital, Fatima Gobi Ventures, 47 Ventures, KASB Securities, BitRate, Invest2Innovate, Zayn Capital, Sarmayacar, HBL Ventures, and Systems Limited. So Pakistani startups are attracting investment from all over the globe.

What are the factors which are attracting investment in Pakistani startups this year? After Covid-19 situation since last year, many governments have released funds to stimulate economies and venture capitalists are flush with cash looking around for good investment opportunities. Second, State Bank of Pakistan has issued some useful regulations regarding startups such as sweat equity and convertible debt which has resulted in boosting foreign investment in startups. Pakistan’s banking regulator has allowed shareholding of Pakistani founders in foreign holding companies of startups in the form of sweat equity. Third, Pakistan is a 200 million plus consumer market and ecommerce for groceries, household related items, and food delivery has flourished after Covid lockdowns.

At present, majority of the investments in Pakistani startups is by foreign investors. If tax incentives are given by FBR to local investors such as tax credit on investments in local startups, then it will trigger local investment in startups also. If investments continue pouring in like this, then valuations of mature startups will continue to rise and Pakistan could see its first unicorn (billion dollar startup) before 2025.

Reference: https://ignite.org.pk/pakistans-startup-ecosystem-is-ready-for-lift-off-now-ceo-ignite/
https://www.daraz.pk/products/a-deep-dive-into-pakistans-startup-ecosystem-i4026334.html

Completing the circuit

So what is a local innovation ecosystem, anyway?

To me, it’s a little like electricity. Let’s say a person has a great idea – we’ll call that the light bulb. When turned on, it can light up a room. But here’s the problem: a light bulb can’t shine on its own. To light up, it needs all sorts of circuitry: connecting wires, a power source, switches, capacitors, and resistors. Without these critical components, the light bulb stays dark, and the idea never reaches the people who need it.

IDIN’s work for the last four years has shown us that there is no shortage of light bulbs. In every community on the planet, people are coming up with creative ideas to solve the problems they face. But too often, the circuitry may not be there to support that idea. Maybe there is no local capital to invest in new businesses, or policies make it difficult to patent an invention. Maybe schools focus on rote learning rather than hands-on problem solving, discouraging youth from exploring new solutions. Or maybe the right people simply aren’t connected to each other.

We’re learning how to complete the circuit. These teams from around the world have a wealth of lessons to share. And if electricity has taught us anything, it’s this: when the circuitry is robust and resilient, it doesn’t just power one light bulb. It can light up a whole city.

A working definition

This has us really excited. We are beginning to dream of a world in which people work together in vibrant, inclusive, and resilient local innovation ecosystems to tackle and solve development challenges.

Our understanding of local innovation ecosystems is evolving every day, as IDIN’s research program explores deep questions and the innovators in the IDIN Network tackle challenges on the front lines. With their help, here is the definition that we have come up with so far:

A local innovation ecosystem is an enabling environment and infrastructure that allows people to engage in iterative processes of innovation and problem solving to generate solutions to local challenges and deliver them to the people who need them.

This definition breaks down into four parts:

1. Enabling Environment: An innovation ecosystem is built on the local institutions, conditions, structures that support innovation. This enabling environment can include educational opportunities in design and innovation, local capital to support innovation and entrepreneurship, physical and virtual spaces for problem-solving, and ways to connect within and across ecosystems.

2. Broad Engagement with Innovation: In a thriving local innovation ecosystem, diverse individuals and institutions can access skills and tools for problem-solving, collaborate with each other, obtain feedback, iterate, learn, and share with others.

3. Solution Development: In a healthy local innovation ecosystem, innovators and entrepreneurs assess social needs, develop products and services to address these needs, and iteratively evaluate and improve these solutions.

4. Solution Delivery: An effective local innovation ecosystem delivers solutions to those who need them.

Crowdsourcing a vision

It’s a start, but we stand to be corrected. That’s the whole point of this trip: for the next two weeks, we’ll be listening and learning from local champions who have tangible examples of ecosystem success and failure. Together, we will start to untangle the complexities, identify the gaps, and refine our collective vision.

We started learning even before we took off. Yesterday, I asked everyone to answer the following question. Here were some of the responses:

“A local innovation ecosystem should….”

• “…engage diverse stakeholders – from educational institutions, to community groups, to government, and business.”
• “…include resources for people to gain the skills/knowledge they lack. It should also consist of a pool of resources for everyone to access.”
• “…comprise relevant and innovative interventions, engaging beneficiaries and all stakeholders needed to keep it sustainable.”

Pulling key words from just these three quotes, we get new insights into a local innovation ecosystem’s components, qualities, and actions.

• Components: Stakeholders. Resources. Interventions. Skills. Knowledge.
• Qualities: Diverse. Sustainable. Innovative. Relevant.
• Actions: Engage. Gain. Access. Include.

Reference: https://www.idin.org/blog-news-events/blog/what-local-innovation-ecosystem

In 1878 Leo Tolstoy released what would become one of his most acclaimed works, the novel ‘Anna Karenina‘. The book started with a quote that over the centuries has transcended disciplines: ‘Happy families are all alike; every unhappy family is unhappy in its own way’.

When taken literally, the quote is a good reflection on family life and family conduct. But as a metaphor, the quote has found application in different fields, from anthropology to ecology, and from philosophy now to business.

The quote became the Anna Karenina Principle, with its popularisation by Jared Diamond in his book ‘Guns, Germs and Steel’. In the book, the principle illustrates why – throughout human history – so few wild animals have been successfully domesticated. A deficiency in any one of a high number of factors can render a species not able to be tamed. Therefore, all successfully domesticated species are not so because of a particular positive trait, but because of a lack of any number of possible negative characteristics. The Anna Karenina Principle can be summed up as: a deficiency in any one of several factors dooms an endeavour to failure – consequently, a successful effort (subject to this principle) is one where every possible deficiency has been avoided or overcome.

With more and more businesses understanding the importance of building innovation ecosystems to ensure sustainable future growth, the Anna Karenina Principle comes to the forefront again in the context of improving or changing these ecosystems.

An innovation ecosystem consists of many elements, all of which need to work in sync for growth to happen. Through our pioneering work around innovation maturity, we’ve concluded that when clustering the many ecosystem elements, you typically end up with five core pillars: strategy, leadership, management, culture and processes. Understanding if any of the components of these pillars is hindering the progress and outcome of the ecosystem becomes paramount when it comes to making improvements or changes. Think of the ecosystem improvement strategy in terms of a sat-nav system in a car. Sat-nav systems are great when they work, but there are times when the link is down, the signal fails, or the reading is off, and the journey can turn into a random game of mystery-road pinball. Or to put it another way, you know where you want to get to, but unless your starting point is clear then any proposed route and any stops along the way are simply guesswork, or in innovation parlance, unproven assumptions!

The same applies when it comes to improving an innovation ecosystem. Unless you are clear on your current starting point, then your roadmap to developing the organisation’s innovation ecosystem and thus maturity will at best be packed with assumptions, and at worst will actively prevent further development.

To illustrate this point, imagine an ecosystem where individual intrapreneurs are too afraid to propose a new idea for fear of being punished by senior leaders. The result is a direct limit to the number of ideas submitted, which will impact the company’s growth in the years to come. This is a clear cultural blocker that needs addressing before making any further investment. If this blocker is not flagged early on, any investment in capability development, for example, will be money poured down the drain. Or another example, if the C-level can’t agree on a clear strategy, the investments are likely to be random. Again, this strategy blocker will have dire implications for the company’s future. Therefore creating, for example, a corporate venture capital fund before developing a clear innovation strategy won’t yield expected results as investments will not be deliberate acts or strategically aligned.

When it comes to improving an ecosystem, another critical aspect to understand is that just doubling down on something that’s already working will not increase outcomes and, in certain situations, may even result in something to the contrary happening. Hence all elements of the ecosystem need to be not just in sync, but equally mature. For example, merely increasing the R&D budget won’t pay off if another factor holds this variable back.

‘There is no statistically significant relationship between how much a company spends on its innovation efforts and its sustained financial performance’, states a Price Waterhouse Cooper research paper. A testament to which is the discrepancy that’s evident when you put Boston Consulting Group’s list of the Top 50 Most Innovative Companies in the World next to Statista’s Top 20 R&D Spenders in the World. Only three of the top ten spenders are in the top ten innovators.

To understand the maturity of each element making up an ecosystem, one first needs to understand the difference between attributes and outputs. For an analogy: should one be considered mature because they brush their teeth and look smart at work or because they are emotionally well developed and bring thoughtful and reasoned arguments to the benefit of the organisation, its people and customers? Outward appearances don’t always reveal what is going on inside; so, measuring random ‘things’ rather than attributes won’t help you unpack and define what is truly going on. When you take ‘things’ away, what remains is a complex interaction between the five pillars of the ecosystem. Drawing those strands together produces an innovation maturity dashboard that, used correctly, informs and guides the creation of an aligned roadmap of required interventions and hence, the progress of the organisation.

The maturity of an ecosystem can be divided into many levels, but from our experience, we’ve found that four levels work best.

Leadership matters

A specific leadership culture is needed to achieve the fourth and highest level of innovation maturity. If we assume that innovation is baked into organisational culture, along with the tools of measurement to gauge its progress, the challenge of leading in that environment remains. In far too many instances, this is where efforts to build innovation ecosystems break down and fail to deliver on the innovation investment promise. Or, put another way, it is at this stage that many organisations put the wrong people into positions of leadership.

Innovation is still primarily viewed as a technical accomplishment that requires leaders with strong technical skills. And while that may be true – your leaders certainly need to know the nuts and bolts of any specific project – it is not enough on its own to deliver on the final vision. Effective leadership today requires an expert-level grasp of both hard and soft leadership skills.

What do we mean by soft skills? Increasingly, leadership development visionaries are pushing for a more holistic view of the skills necessary to motivate and engage employees, particularly when they are involved in a specific project with particular expectations and goals. Leading for innovation is about demonstrating a full range of skills that could be captured under the broad label of ’emotional intelligence’ (EI), a hot commodity now among leadership development gurus.

EI has a broad and still evolving definition and can include everything from extensive and effective communication, cross-disciplinary collaboration and building a sense of community. However, there is a consensus around the need to develop more complex skills like empathy and compassion. Although they can be developed in most leaders, these are generally not included in the natural skill set of many strong technical leaders. The result is a significant gap between an organisation coming up with ideas (inventing) and executing and implementing those ideas (innovating). Bridging that gap is often the missing element in many promising projects that stumble before they come to fruition.

Applying liberal doses of empathy and compassion, even in the development of a purely technical challenge, has many different benefits. First, it makes it much more likely that an innovation team will reach its goal and bridge the gap between idea and execution. Leaders able to apply high levels of EI to their project oversight usually find the right outcome arrives on-budget and on-time more often and with a much higher degree of buy-in from the team. EI-driven leaders are also more likely to assemble a team that operates by consensus and mutual support. However, organisations that instil EI across all leadership levels also benefit from much broader and deeper engagement and acceptance of innovation by employees, greatly reducing the possibility that new innovative ideas developed by one team are resisted by the rest of the organisation.

Gauging an ecosystem’s maturity

The best way to gauge an ecosystem’s maturity and needs is to apply a company-wide survey asking multiple-choice questions about every subsection of each of the five pillars. For example, questions around the ecosystem’s leadership could be along the lines of:

• Our leadership team provides the right support and resources to deliver on our company’s innovation goals and ambitions.
• Our leadership team is consistent in putting words into action around innovation.
• There is clear and visible leadership ownership and sponsorship for innovation.

For statistical accuracy, a review of this kind needs to be distributed both vertically and horizontally across the organisation. Note that to get a statistically accurate (within an agreed margin) high-resolution picture of what the ecosystem needs, the survey doesn’t need to be taken by everyone in the company. As long as it gets to a cross-section of people both horizontally and vertically, there is usually no need to get participation from more than 10% of the ecosystem.

For increased accuracy, you can combine the survey data with an analysis of the ecosystem’s outcomes. If the findings from the survey can explain the shortcomings in the outcomes, now the ecosystem’s needs are clear.

In a nutshell if one wants to improve an existing ecosystem, a continuous improvement process is made up of the following five steps:

1. Assess the current state of the ecosystem using both the survey method and analysis of its outcomes.
2. Understand the limiting factors or blockers of the ecosystem – the things that hinder the ecosystem’s level of maturity and its outcomes.
3. Tackle the blockers with appropriate actions (e.g. leadership development, process improvement initiatives, cultural transformation)
4. Re-measure the ecosystem once the steps have been deployed to evaluate the level of expected change.
5. Re-do the loop every time the ecosystem needs improvement.

Successful innovation requires more than just process transformation; it calls for the entire ecosystem to have an innovative ethos and be equipped to tackle the challenges of today and the unfolding opportunities of tomorrow. This includes the need to have an appropriate HR strategy, a proper structure, demonstrable executive-level support, and a culture built around the pursuit of innovation. All this also built around a core purpose and a deep-rooted desire to pursue better. Action to improve any ecosystem shouldn’t be taken until the current situation is fully understood. So, analysis of the ecosystem needs to have the full support of the executive team if it is to uncover the ecosystem blockers preventing the company from achieving its growth goals.

Making sure your family is a happy one is not a matter of luck nor will, but a matter of understanding the particular needs of your family. In the same way, developing your innovation ecosystem cannot be done by observing another company’s innovation strategy, capability or culture. Assessing your ecosystem should be the first step before any improvement measures are taken as they need to be specific to your ecosystem and your ecosystem alone.

Reference: https://blogs.lse.ac.uk/businessreview/2020/10/29/to-drive-innovation-you-must-understand-your-ecosystem/

Over the last 20 years, digital design and collaboration tools have fundamentally altered how firms approach innovation. In the pre-digital era, product and service development was usually conducted by experts working inside firms or through expert vendors hired by those firms.

Today, aided by digital design and  fabrication tools on the one hand and social networking communities and collaboration/sharing  tools on the other, an expanded “innovation landscape” is marked by new forms of participation and ownership, with new participants entering new markets and new arrangements of collective innovation.

The good news, of course, is that this expanded landscape creates an opportunity-rich environment for firms to innovate. The bad news is that these opportunities also create some new challenges. Managers need a framework for navigating this new landscape and harnessing the power of these new tools.

To help make sense of the opportunities and challenges ahead, we have identified four distinct innovation modes. Each mode is characterized by its own set of stakeholders and interaction dynamics, along with specific ways that companies can achieve a competitive advantage.

The specialist mode

In the specialist mode, companies will create new products and services by pushing the envelope of product performance, with improvements allowed by digital design. In this mode, high-risk, high-reward projects are typically developed and commercialized by formal organizations, using either hierarchy (in-house) or markets (out-sourced) as organizing mechanisms. Companies such as Volkswagen, Boeing, IBM, and Apple are active in this mode.

One challenges with the specialist mode is that companies must build these technical capabilities in-house to prevent imitation from competitors; to attract and retain top talent; and to maintain process rigor in the an era of increasing design churn. Tesla’s effort to develop its battery Gigafactory is an example of a specialist developing internal capabilities for competitive advantage.

The venture mode

The venture mode expands the flexibility and speed with which innovators act. These can be individuals inside corporations, but also entrepreneurs, tinkerers, and do-it-yourselfers who tend to assemble the necessary resources by using intermediate services which provide access to specialized tools and skills. Advancements in digital design tools have drastically lowered the entry barriers and allowed many more to participate in this mode. For managers of more established firms, this mode can allow small, entrepreneurial teams to develop new product and service ideas and test them at low cost. These internal “startup” teams can help seed traditional concept funnels with ideas that are more advanced in terms of design and concept testing than traditional methods.

One challenge for firms active in the venture mode is to quickly identify, select, and assemble necessary resources.  These markets are often moving fast, and the ability to protect the business through intellectual property is often limited, so the most powerful competitive advantage is high velocity.

The community mode

The third mode of the new innovation landscape attracts large numbers of new entrants due to the low barriers of entry and includes — at least in part — a trust-based form of organizing. For this reason we label this the community mode. Similar to open innovation, the setting of organizational and decision-making boundaries becomes substantially “fuzzy” as collaborating with like-minded strangers becomes an integral part for some business models. The spectacular rise and fall of Quirky, Inc., one of the first social product development companies, is an example of this mode. The opportunities for firms operating in this mode are potentially new forms of market development and user engagement. New ideas and closer ties with consumers can be the result of open innovation efforts.

Managers operating in the community mode need to understand the challenges of maintaining, incentivizing, and capturing true value-added contributions from these communities.  If the opinion of 1,000,000 community members has to be considered, for example, then the decision-making authority of the firm is more constrained.

The network mode

The network mode is characterized by the high performance product design expertise seen in specialist firms with trust-based sharing behavior typical of communities and close vendor networks. The opportunity in this mode lies in the chance to build an innovation system where the whole is more than the sum of its parts. Bringing together the expertise from a wide range of disciplines and geographies, supported and enabled by advanced digital tools, allows the emergence of entirely new solutions, potentially one which would never emerge in traditional organizational set-ups. Rearranging organizational boundaries and new incentive structures are part of this opportunity.

The challenges lie in how to successfully develop and manage the processes, which requires more coordination due to the greater levels of complexity. Building social norms, ensuring sufficient overlap, or at least information flow between designer and user communities, and orchestrating the actual work are no easy tasks.

Source: https://hbr.org/2016/06/the-4-main-ways-to-innovate-in-a-digital-economy

The theory of disruptive innovation, introduced in 1995, has proved to be a powerful way of thinking about innovation-driven growth. Many leaders of small, entrepreneurial companies praise it as their guiding star; so do many executives at large, well-established organizations, including Intel, Southern New Hampshire University, and Salesforce.com.

Unfortunately, disruption theory is in danger of becoming a victim of its own success. Despite broad dissemination, the theory’s core concepts have been widely misunderstood and its basic tenets frequently misapplied. Furthermore, essential refinements in the theory over the past 20 years appear to have been overshadowed by the popularity of the initial formulation. As a result, the theory is sometimes criticized for shortcomings that have already been addressed.

There’s another troubling concern: In our experience, too many people who speak of “disruption” have not read a serious book or article on the subject. Too frequently, they use the term loosely to invoke the concept of innovation in support of whatever it is they wish to do. Many researchers, writers, and consultants use “disruptive innovation” to describe any situation in which an industry is shaken up and previously successful incumbents stumble. But that’s much too broad a usage.

The problem with conflating a disruptive innovation with any breakthrough that changes an industry’s competitive patterns is that different types of innovation require different strategic approaches. To put it another way, the lessons we’ve learned about succeeding as a disruptive innovator (or defending against a disruptive challenger) will not apply to every company in a shifting market. If we get sloppy with our labels or fail to integrate insights from subsequent research and experience into the original theory, then managers may end up using the wrong tools for their context, reducing their chances of success. Over time, the theory’s usefulness will be undermined.

This article is part of an effort to capture the state of the art. We begin by exploring the basic tenets of disruptive innovation and examining whether they apply to Uber. Then we point out some common pitfalls in the theory’s application, how these arise, and why correctly using the theory matters. We go on to trace major turning points in the evolution of our thinking and make the case that what we have learned allows us to more accurately predict which businesses will grow.

Is Uber a Disruptive Innovation?

Let’s consider Uber, the much-feted transportation company whose mobile application connects consumers who need rides with drivers who are willing to provide them. Founded in 2009, the company has enjoyed fantastic growth (it operates in hundreds of cities in 60 countries and is still expanding). It has reported tremendous financial success (the most recent funding round implies an enterprise value in the vicinity of $50 billion). And it has spawned a slew of imitators (other start-ups are trying to emulate its “market-making” business model). Uber is clearly transforming the taxi business in the United States. But is it disrupting the taxi business?

According to the theory, the answer is no. Uber’s financial and strategic achievements do not qualify the company as genuinely disruptive—although the company is almost always described that way. Here are two reasons why the label doesn’t fit.

Disruptive innovations originate in low-end or new-market footholds.

Disruptive innovations are made possible because they get started in two types of markets that incumbents overlook. Low-end footholds exist because incumbents typically try to provide their most profitable and demanding customers with ever-improving products and services, and they pay less attention to less-demanding customers. In fact, incumbents’ offerings often overshoot the performance requirements of the latter. This opens the door to a disrupter focused (at first) on providing those low-end customers with a “good enough” product.

In the case of new-market footholds, disrupters create a market where none existed. Put simply, they find a way to turn nonconsumers into consumers. For example, in the early days of photocopying technology, Xerox targeted large corporations and charged high prices in order to provide the performance that those customers required. School librarians, bowling-league operators, and other small customers, priced out of the market, made do with carbon paper or mimeograph machines. Then in the late 1970s, new challengers introduced personal copiers, offering an affordable solution to individuals and small organizations—and a new market was created. From this relatively modest beginning, personal photocopier makers gradually built a major position in the mainstream photocopier market that Xerox valued.

We still have a lot to learn.

We are eager to keep expanding and refining the theory of disruptive innovation, and much work lies ahead. For example, universally effective responses to disruptive threats remain elusive. Our current belief is that companies should create a separate division that operates under the protection of senior leadership to explore and exploit a new disruptive model. Sometimes this works—and sometimes it doesn’t. In certain cases, a failed response to a disruptive threat cannot be attributed to a lack of understanding, insufficient executive attention, or inadequate financial investment. The challenges that arise from being an incumbent and an entrant simultaneously have yet to be fully specified; how best to meet those challenges is still to be discovered.

Disruption theory does not, and never will, explain everything about innovation specifically or business success generally. Far too many other forces are in play, each of which will reward further study. Integrating them all into a comprehensive theory of business success is an ambitious goal, one we are unlikely to attain anytime soon.

But there is cause for hope: Empirical tests show that using disruptive theory makes us measurably and significantly more accurate in our predictions of which fledgling businesses will succeed. As an ever-growing community of researchers and practitioners continues to build on disruption theory and integrate it with other perspectives, we will come to an even better understanding of what helps firms innovate successfully

Source: https://hbr.org/2015/12/what-is-disruptive-innovation

To build a culture of innovation, ideas must be able to flourish.

All companies acquire culture, with or without trying. Some cultures become more innovative than others. How do they accomplish this feat?

In this post, I explain how companies cultivate innovation by contending with two culture algorithms: one governing individual behavior and the other, group behavior. I provide advice on specific actions you can take individually to grow your innovation culture—and if you’re also a leader, further steps to nudge your organization closer to winning your future.

 Culture begins with you and an idea.

The solid foundation for a science of innovation is our biology. Through this lens, we can see an idea for what it is—a network in our brains. When a new idea comes to mind, it does so because a specific constellation of neurons fires with each other for the first time. Whether your idea is a new way to solve a complex business problem, a tagline in a marketing campaign, or a software application feature, ideas are physical networks of thousands of co-firing neurons.

Mind boggling, right?

Although we do not know precisely how creativity works, we do know that it is an evolutionary process within the brain. It depends on neurons exploring the adjacent connections they can make with other neurons. Through trial and error, we consciously and subconsciously explore variations of an idea, discover its merits and faults, discard unworkable ideas, and nurture the most successful. This process is possible—and only possible—because a specific network of neurons connects with new neurons or adopts a new configuration.

The “idea” of an idea as a network makes several imperatives clear. A network must be both dense and dynamic to produce innovation. We can’t have an epiphany with only a few neurons firing. And even if a network is dense, it must also be changing; a static network is incapable of exploring new possibilities and improving upon existing ideas.

How, then, can we become more innovative individuals? We can push our brains to form more creative networks by placing ourselves in environments that mimic our neural signature—connecting with diverse people and ideas and experimenting with the ideas that emerge.

Step 1: Increase the density, diversity, and dynamism of your innovation network.

First ask, “How extensive is your network?” If your network is small, expand it. For instance, consider attending a virtual cocktail party. And once social distancing passes, commit to never eating alone.

Next ask, “How diverse is your network?” Consider how many people you connect with weekly with different backgrounds and perspectives from yours: teenagers and senior citizens; people who were born in or come from other countries or socioeconomic backgrounds; those with different political leanings from your own; and colleagues from different divisions, professions, and industries.

If your network consists of similar people, make it a priority to identify and get into conversation with people who are different from you. Reach across the aisle. Do it weekly, if not daily, and guarantee that it happens by scheduling it in your calendar—now.

How many conferences do you attend each year? Once they’re back up and running again, attend at least two. When you’re there, make an effort to meet new people and get to know what problems and issues they’re facing. Ask for their ideas and perspectives on the problems you face. If it’s not feasible to attend conferences in person, do so virtually, and set aside time to watch one TED Talk daily. And this is important—engage in the conversation in the comments.

Join an innovation community, and if one doesn’t exist that’s right for you, create one. Meet at least monthly to discuss trends and new ideas. And make sure its membership is diverse and includes members that don’t think like you.

Consider cross-training with experts. Let’s say you’re a Design Thinker and applying another innovation methodology is anathema. Take a course in a competing innovation methodology anyway. You may be surprised by the ideas that emerge.

Step 2: Provide a mechanism for people to easily remember ideas.

Finally, we must remember our ideas. It is in our nature not only to forget but to be overconfident that we’ll not forget. Hence, if you don’t already have a journaling practice, write *everything* down in a book, journal, or if you must, with post-it notes.

Taking these actions will increase the odds that *you* will have a spark, flash, lightbulb moment, breakthrough, or epiphany. And cultivating an innovation culture begins with *you.*

Now, are these actions sufficient to ignite a culture of innovation?

Whether neonatal ideas survive or not depends upon another challenge—how well you can nurture them to be spreadable to others.

Culture evolves as ideas spread to others.

While it is true that ideas happen inside minds, no mind is an island. Our connections with others give flight to ideas. Gossip, internet memes, and well-posed ideas can spread like wildfire. How do ideas like these come to flourish?

There are three characteristics of ideas that thrive. These ideas:

1. Grab and hold our attention;
2. Are easy to remember;
3. Compel us to act.

The others die.

Consider the last idea you encountered. Did you act on it? If so, you transmuted the idea from the world of neurons into physical behavior. Writing an idea down, expanding on it, or presenting it to others gives it life. Liking a post, sharing it, or—even better—commenting on it, amplifies the idea and nudges it to evolve into something more spread-worthy. Your conspicuous purchases advertises desires, beliefs, and ideas to others. So, too, does working to break free from a bad habit and replacing it with a good one. It is action—and only action—that allows sparks to leap from one innovator and ignite another.

Your action gives the idea the potential to be seen, understood, and imitated. If the idea then grabs and holds someone else’s attention, it has another chance to be understood, remembered, and—if useful to the holder—acted upon again.

Ideas that survive take hold, are retold, and over subsequent rounds of retelling, the most spread-worthy ideas will spread widely and eventually take over the culture. As different minds tinker with the idea differently, the idea will cumulatively evolve to become more effective at spreading.

Just as an idea is a network in a brain, culture is a network of ideas that link brains—a set of shared ideas that cause their holders to act alike in some ways.

Therein lies the challenge in stoking a culture of innovation. It’s not enough to have a fully formed idea in your mind of how the world could be and a way to make it so. It’s necessary to translate the web of ideas in your mind into a string of action that is worthy of the attention of others, causes them to seek to grasp the idea, and motivates them to act, thereby transmitting the idea to others.

Action is necessary because we cannot download each other’s knowledge like an app. Without action, an idea lies inert in a siloed mind. With action, an idea becomes noticeable. It can vie for the attention of others, win their acceptance, and affect their behavior. And activities that cause an idea to spread do not need to be an explicit retelling of the idea in writing or presentation. As long as it can be observed and imitated, it can spread.

How, then, can we organizationally become more innovative?

Recognize there’s a direct connection between our biology and culture. We’re not blank slates. We can only use the tools we’ve inherited. Instead of obsessing over innovation theater—such as idea challenges, hackathons, bean bags, and smoothie machines—play with the significant forces that have shaped us over eons.

If we wish to nurture an innovation culture, we must cultivate an innovation network. This approach is sometimes called mimetics, which calls on us to follow biology as a teacher in fostering change. Start by supporting your people with the tools that help them form denser, more diverse, and more dynamic networks.

Foster internal meetups. If you can afford it, pay for their attendance at conferences. Open your all-hands meetings with an external speaker. If that’s unreasonable, play a TED talk.

Pay to train your people in a variety of innovation methodologies. If that is unaffordable, buy them books monthly and incentivize them to study them, such as with 30-minutes of daily paid leave to read.

Give them a place to record and remember their ideas. You could undoubtedly implement a heavyweight innovation management tool. There are effective lightweight solutions, too. Moo, for example, offers high-quality journals suitable for this purpose. At the start of meetings, give each team member a standup-minute to share one new idea. For the most promising idea in a given round, set a clock for ten minutes and allow the team to discuss it. You might be surprised by how quickly innovation begins to increase.

Next, engineer the structure of your innovation network to optimize the flow of useful information. Planning this system requires balance. At one end of the spectrum, a network with no connections and no information flow is like ice—a solid frozen in time. At the other extreme, everyone is connected with everyone else, inundating them with information and ideas. There are numerous collisions—as we see in any gas—but ideas form and dissolve quickly like wisps of clouds. No one retains information.

The best network will find a middle ground. Rather than connect everyone, get the right people connected. Identify who is responsible for making sure the *right* products and services will enter the development process. Your guiding team will likely include a mix of developers, engineers, scientists, marketers, and front-line leaders.

Then ensure they have the information they need to conceptualize winning solutions (i.e., products and services that get the customer’s “job” done better or more cheaply). They must also be able to assess, with a high degree of certainty, which proposed solutions will get the “job” done best and win in the marketplace. They must have a fail-safe method in place for deciding where to invest. In my experience, companies spend far more marketing inferior products to their customers than they spend gathering and prioritizing their customers’ needs. They further forgo opportunities when they fail to disseminate those insights far and wide in their innovation networks—where other innovators can make the best use of that information.

Don’t be that company.

Step 4: Align your teams by giving them a north-star—a strategic intent based on the core jobs your customers are trying to get done.

You also need to give your innovation teams a destination postcard—a strategic intent—that paints a picture of a future worth creating. Here are a few examples of strategic purposes that are job-focused, capture the essence of winning, and set targets that deserve personal effort and commitment:

• “Land a man on the moon ahead of the Soviets.”
• “We want to put 1000s of songs in your pocket.”
• “Save endangered species from extinction.”

(As an aside, Strategyn’s purpose is to enrich lives by bringing predictability to the often-random process of innovation. We’ve thus set our strategic intent as, “Help 30 companies secure a market leadership position in the next three years.”)

What future can you create that inspires you and calls your people to bring forward their best ideas and thinking?

Creating strategic intent is especially helpful when facing tribalism – behaviors and attitudes that stem from strong loyalties to particular social groups, which tend to slow innovation. Tribalism results in different groups pursuing different goals or pursuing the same goals with different beliefs. This misalignment is like many sabretooth tigers, each pursuing different wooly mammoths. Both are now extinct. By appealing to a shared identity, a shared ideal, and shared destination, setting a strategic intent aligns those who get it and want it to work together, as a pride of lions, on the hunt to create a desired future.

Step 5: Live by values that increase the odds that the best ideas emerge and are allowed to spread.

Finally, consider your values. In innovation cultures that flourish, while everyone desires to be right, they collectively want to know the truth. They thereby live by values such as:

1. Everyone must acknowledge that not everyone can be right about everything.
2. Everyone must give airtime to conflicting views.
3. You have to provide reasons for your beliefs.
4. You’re allowed to point out flaws in the opinions, ideas, or thoughts of others.
5. You’re not allowed to forcibly shut people down who disagree with you.

Consider the extreme case in which the opposite of these values is present—it’s the very definition of a static, unchanging culture. Don’t attempt to engineer a culture that is, whether by design or accident, in opposition to these values. It’s a losing proposition.

Culture can be shaped to cause ideas to flourish.

What is a good innovation culture? We can judge the goodness of a culture by its fitness for the organization’s purpose or intent. Ask, “How well does our culture help our people and our customers to get their jobs done?”

Mostly, culture comes to be by accident. Are we taking our good and bad innovation fortune for granted? What if we can actively shape it instead?

I propose that we *can* shape our innovation culture. Let’s carry forward our list of imperatives:

1. As individuals, increase the density, diversity, and dynamism of our own networks of connections with people and ideas.
2. Provide a mechanism for people to easily remember ideas (and find them when forgotten).
3. As leaders, increase the density, diversity, and dynamism of connections *between* people in our organizations.
4. Align our teams by giving them a north-star—a strategic intent based on the core jobs your customers are trying to get done.
5. Live by values that increase the odds that the best ideas emerge and are allowed to spread.

Culture embodies the lessons of our inheritance—both its gifts and burdens. It’s part of what explains our past success. What predicts our future success? Your contribution and our collective ability to help ideas to flourish.