The Most Creative Product Ever

A noteworthy business author explains why it's not what you make, it's the way and the why you do what you do.

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It's not what you make, it's the way you do the thing you do

I was recently asked to speak at a conference about the role of innovation in enduring great companies. My first impulse was to decline, for a simple reason: great companies do not necessarily have innovation as a central part of their vision or strategy. They are just as likely to be followers as they are to be leaders with pioneering products and leading-edge services. IBM, for example, grew from a one-building small business into one of the largest corporations in the world because of its professional sales force, not its product innovation. In fact, when IBM fully launched into computers, in the early 1960s, it already lagged far behind rival companies, such as Burroughs, in innovative computer technology. And it was Diner's Club, not American Express, that invented the modern credit card. American Express didn't introduce its card until eight years after the debut of Diner's Club--hardly leading-edge behavior. Nordstrom, Wal-Mart, McKinsey, Marriott--none of those companies attained success primarily through innovation.

Certainly, some great companies--notably Sony, Johnson & Johnson, W.L. Gore, and 3M--have innovation as a core value or an integral part of their strategy. So, you can be innovative and great. But the fact remains: you do not need to have innovative products, services, or technologies, or visionary market ideas, to create a great company.

But I decided to do the speech, because while not all great companies have innovative products or services, they all--without exception--pursue the most profound and powerful form of innovation: social innovation. Social innovation--or what I like to call innovation squared--makes most first-order innovation and human productivity possible in the first place. The invention of constitutional government, of private property as a social mechanism, of money, of public stock ownership, of the corporation, of the free-market economy, of public education--those social innovations are ultimately more significant than the invention of the personal computer, the telephone, the automobile, the jet airplane, or the Internet.

Let me use my own experience in the world of rock climbing to illustrate the power of social innovation to drive human progress. In the past 30 years climbing has seen gigantic leaps in accomplishment. Sheer, overhanging rock faces once deemed unscalable now get climbed by 15-year-old kids as "warm-ups." It took 47 days to climb the south face of El Capitan on the first ascent in 1958; the current record stands at under five hours. While technical innovations, such as sticky shoe rubber, contributed to climbing progress, the primary drivers were in fact social innovations. The decision to include the names of first ascentionists in guidebooks fueled a fierce competition among climbers to push standards and establish new routes. The radical social innovation to work climbs from the "top down" rather than take the conventional approach to work from the "ground up"--essentially reverse-engineering a climb--shattered a social convention and led to a quantum leap in standards. Those and other social innovations, such as international climbing competitions, drove technical innovation, not the other way around.

To take the concept to an organizational level, let me ask you to shift your attention from product and technological innovation to social innovation. Think of it this way: what was Thomas Edison's greatest invention? Not the lightbulb. Not the phonograph. Not the telegraph. I agree with many Edison observers that his greatest invention was the modern research-and-development laboratory--a social invention. What was Henry Ford's greatest invention? Not the Model T but the first successful large-scale application of a new method of management--the assembly line--to the automobile industry. What was Walt Disney's greatest creation? Not Disneyland or Mickey Mouse but the Disney creative department, which to this day continues to generate ingenious ways to make people happy.

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