Transcriber: Mary Kay Reviewer: Denise RQ
﻿Growing up, I was the kind of child who was every teacher's nightmare.
I was rambunctious.
I couldn't stay focused for very long,
I was acting out all the time and disrupting class.
As a child, we call that difficult.
As an adult, we call that an entrepreneur.
(Laughter)
Little did I know that my path
would take me in this very circuitous route,
as an entrepreneur and venture capitalist,
and now as a person who studies innovation,
primarily innovation ecosystems.
It led me to a question that I wanted to answer.
I've been reading all these books about innovation.
You cannot go on Amazon these days
and look at a business book that doesn't have innovation
either as its primary theme or as a key topic within it.
If we've been studying innovation for as long as we have,
if we've been writing about it and researching it,
why does it still seem to be so elusive?
Why does innovation seem to be so hard?
In addition, if we understood what innovation really was,
how do we make more of it happen?
Once we do understand innovation,
why is it that we fail to implement the knowledge that we have?
In essence, why is there a gap
between knowing what we should do and actually doing it?
It was a book that I had read
that a colleague of mine gave me called "The knowing-doing gap"
by Pfeffer and Sutton where it all became clear.
Knowing what to do often exists up here.
Doing exists in your fingertips. But it's not a linear path.
In fact, it's a circuit that goes through our emotional centers.
As human beings, we are emotional beings.
We're connected to each other through our empathy and our humanity.
It's this very same thing
that can actually get in the way of us living our truest potential.
We created this model to describe how businesses behave
both in more traditional linear production businesses
but also in the knowledge and creative businesses.
I want to share a little of that with you today.
In our research, we described
the linear production systems of the 19th and 20th centuries,
what we've seen in agrarian and industrial economies as plantations.
They're built on models of scarcity.
We have only so much resources to work with,
so much good land, water, soil, and people.
We have to allocate these resources very, very efficiently
because any waste of these diminishes our productivity, efficiency, and outcome.
These models are very pristine and perfect.
All of our knowledge goes
to the engineering of the process we work with.
They're wonderful in that way.
We know exactly what we're supposed to do,
but they don't allow for any unplanned outcomes.
If a weed grows up in your plantation, you pull it out
because it competes for the very resources we are looking for.
We see this played out over and over again
from the production lines of the automobile industry
to how we work with the military industrial complex.
Even the way we make chips today is exactly the same process.
It wastes the fewest number of resources, it produces the highest output.
We are noticing another complementary but also competing model
that was working against that.
In the first model, the mantra is, "Thou shalt not make mistakes."
In this new model, we have something very different going on.
We call this model the knowledge creation model.
We call these rainforests.
These rainforests are built on mindsets of abundance rather than scarcity.
If you and I get together for coffee and we share an idea,
we each now have two ideas.
If we get a whole group of us to share ideas, we have lots of ideas.
In fact, it's the one time that the more we engage and come together,
the capacity of what we're doing goes to infinity.
It's the exact opposite of what happened in the plantation model
where, as we consumed resources, we take it down to zero,
and it creates the mindset of scarcity.
Matt Ridley, in his book "The rational optimist," said:
"Innovation is all about ideas having sex."
That was a revelation for me.
As soon as I heard that, I knew exactly what my job was.
I am here to promote promiscuity of ideas.
(Laughter)
I am here to build the brothels of innovation,
and I want you to join me.
We call these brothels rainforests.
When you look at the rainforest as opposed to the plantation,
you're not really sure what you're supposed to be looking at.
It's lush, dense, green, and beautiful.
But, believe it or not,
the most important thing in the rainforest are the weeds you are standing on.
These are the Googles and the Facebooks.
These are the things that, when they first present themselves,
look like something that's not supposed to be there.
Not only do the businesses look a little odd, the people look even odder.
(Laughter)
You can see a young Bill Gates and a young Paul Allen in that picture.
If this young man came up to you,
would you recognize him as a future leader?
What do leaders look like in this new economy model?
Therein lies what we call the paradox of innovation.
Innovation looks like the social equivalent of a genetic mistake.
It's not supposed to be there.
It threatens the very paradigm to which it's supposed to help.
In fact, innovation is only recognized and validated once it becomes imitation.
How are we trying to make innovation happen
when the only way we judge it is in the rear-view mirror?
Over the years, experts have been trying to pick innovation.
Yet, experts always get it wrong.
Whether it was the invention of the telephone, the airplane
or even the use of personal computers,
the best experts of the time don't recognize it
because current wisdom does not allow for these new paradigm shifts.
What it really takes to solve the greatest problems of the world
is your imagination.
Very often, the knowledge we need to solve the problems
and to create the new innovative tools doesn't yet exist.
That's why innovation requires
so much experimentation, iteration and, most importantly, evolution.
The mantra in the first model was: "Thou shalt not make mistakes."
I reward you for not making mistakes.
In this new model, what I'm going to reward you for
is learning how to solve problems,
coming together and using your knowledge to solve the greatest problems.
As Edison said, he's never failed.
He's just found 10,000 ways not to do something.
It's in that knowledge.
Believe me, I relate to that a lot.
All innovation is human-centric.
It's about human beings acting out and doing something out of their will.
That's also where it gets in our way.
Humans are the only species with the ability for prospective thought,
to think about the future, to model it, and change our behavior in the moment.
Intellectually, there is probably no reason to buy a lottery ticket.
But in the moment we buy that lottery ticket, something happens.
We actually feel good.
The reason we feel good is
because our mind creates a future memory of what we're doing.
We think about the car we're going to buy, the job we're going to be able to quit,
and the home we're going to be able to update.
In that moment, we feel very good.
It's that same emotion that also keeps us from doing things.
Very often, whether we're governments, corporations, or communities,
we're trying to figure out what kind of outcomes we're trying to generate.
We want more jobs. We want prosperity. We want greater revenue in our businesses.
What is it that we have to do?
We talk about building incubators, tech parks, and venture funds.
That's where we tend to focus. But we find that isn't very sustainable.
In fact, here in San Diego, people have been coming from all over the world
to study models like Silicon Valley in San Diego, in Boston and in Israel
and trying to take those lessons back.
When they go to apply them, they tend not to work,
and they can't figure out why.
If it worked in one place, why doesn't it work in the other?
That is because, what we find is that actions are a result of behaviors,
which are a result of attitudes and motivation.
Ultimately, they are a result of our beliefs.
I've observed that,
that when we go to places like the Silicon Valley, Boston, and Israel,
what we find is that there are different belief systems in place,
that people wake up every morning believing and acting upon.
Trust me, you will act very consistently to your beliefs if they're strong enough.
This is really where we should focus.
One of the case studies we looked at was the religion of Apple.
How did Steve Jobs get everyone in the world to act like his employee
without ever having to put them on the payroll?
All of us approach the ownership of our Apple products
with such a religious zeal that it's envious of every company.
People like their Microsoft products. People love their Motorola phones.
We use them.
In some ways, they are superior pieces of technology.
But Steve Jobs found a way of embedding love and emotion
into each of the products.
Because of that, people reward them
with their loyalty and their continued patronage.
What does it really take to create these belief systems?
We first have to understand what drives our belief systems.
So often, when we work with regions and we ask them:
"What do you think is the greatest de-motivator
or the reason that you don't succeed?"
They said, "We don't take risks. We don't like failure.
We don't like things that are ambiguous and unclear."
What we tell them is, "None of us really do."
Entrepreneurs are not inherently risk seeking.
They're opportunity seeking.
They just think they have better ways of managing the risks that they work with.
Fear is not the most important emotion.
It is hope.
It's when you buy that lottery ticket, believing you can change the world
- that's when you change -
in that moment, you can create a different future for yourself.
What we find is that thinking plus feeling is believing.
It's not enough to just have a different mindset.
You must have a different heart-set as well.
It's the combination of those two that will drive innovation.
In conclusion, we don't want you to think like an economist.
We want you to think like a psychologist.
Because if you think like a psychologist,
you will get people motivated to believe in what they do.
As Maya Angelou said: "Long after people will remember what you said or did,
they're going to remember how you made them feel."
By the way, I hate this expression: "Thinking outside the box."
It's not about thinking outside the box.
It's realizing that the box doesn't even exist in the first place.
That's why entrepreneurs are able to succeed.
The rules of these rainforests that we create around the world
are to break rules and dreams.
Entrepreneurs are a bit naughty. I'm still naughty.
I still kind of bend the rules a little bit.
My favorite one is [number] five, to seek fairness, not advantage.
We are all partners in this.
We don't know exactly how the future is going to turn out,
but we're going on the journey together.
In conclusion, without order, nothing can exist.
But without chaos, nothing can evolve.
My recommendation to everyone
is to go out there and create a little chaos.
Thank you.
(Applause)