So Crazy, It Might Just Work: How Foolishness Feeds Innovation

Full Transcript

Kevin Cool: If we want to seriously address the climate crisis, then we need to encourage foolish business ideas.

Shlomzion Shen: I would say imagination is something that every entrepreneur has to have, and they need to be a little bit naive in order to take something that is completely out of the box and believe — really believe — that it’s going to work. My name is Shlomzion Shen, and I’m the co-founder and CEO of Seevix Material Sciences. Seevix is a biotech company operating in the synthetic biology field, which has created the patented and very unique biomaterial inspired by spider silk.

Kevin Cool: Spider silk: it can be used for everything from surgical thread to bulletproof clothing. The ancient Greeks used it to keep wounds from bleeding. But even though it has been in use for a thousand years, spider silk isn’t easy to acquire.

Shlomzion Shen: Spiders are cannibalistic and territorial, so you can’t farm them. It’s the Holy Grail of materials because it’s strong and it’s elastic, and it has the toughness that no other material has. Many times on the business side, it makes much more sense to start with a market need and then go and figure out how do we solve this market need.

But a lot of innovation, specifically in Seevix, came from the fact that we had a unique technology that has been developed and we’re now starting to figure out what do we do with this. And considering applications, we were thinking, okay, so we have to use it in automotive, aerospace. And then came around the era of biomaterials, looking for sustainable and ecofriendly and degradable materials. So, that came later.

Kevin Cool: An exciting super material with many innovative uses that can be produced in an environmentally sustainable way. Breakthroughs like this can be revolutionary, but the path to finding them is usually littered with disappointment.

Shlomzion Shen: There are a lot of ways to fail, and we fail in all of them, but every failure brings the success. In every failure, you learn so much about how to do it right.

Kevin Cool: Hi, I’m Kevin Cool, Senior Editor at Stanford Graduate School of Business. Hearing Shlomzion’s story about all the fascinating potential of synthetic spider silk makes me wonder how organizations foster innovation and the kind of culture that brings about transformational change, particularly when it comes to addressing the climate crisis. True innovation often starts by focusing on what you’re good at rather than focusing on the outcome.

This is If/Then, a podcast from Stanford Graduate School of Business, where we examine research findings that can help us navigate the complex issues facing us in business, leadership, and society. Today we speak with William Barnett, the. Thomas M. Siebel Professor of Business Leadership, Strategy, and Organizations here at the GSB and Professor at the Stanford Doerr School of Sustainability.

Professor Barnett’s research challenges how we view failure and progress. He suggests that to address daunting issues like climate change, organizations have to create an environment where failure is embraced as a stepping stone toward breakthroughs. Professor Barnett argues that you don’t need to know where your ideas will take you. In fact, you shouldn’t know.

William Barnett: Just start with what you’re good at as opposed to starting with the outcome.

Kevin Cool: Each episode of our show looks at a topic through the lens of an if/then statement. Professor Barnett’s is: if we want to seriously address the climate crisis, then we need to encourage foolish business ideas.

Recycling our milk cartons, it’s all great, it’s a great practice, but we need to look larger than that. And you teach a class where essentially that’s part of the message, right?

William Barnett: When you hear the science about how the world is changing and the climate is changing, it’s pretty sobering. And I think it’s important to realize when we get hit with the reality of what our earth and humanity is up against, the natural first reaction is to think of our own behavior as an individual. The degree to which we’re responsible for because of our individual actions. Lots of carbon dioxide being released, and that carbon dioxide’s forever once it’s released. But it’s ironic because just dealing with our own consumer behavior, while very important, is not enough.

And I think it’s natural for folks to think in terms of either that individual level of analysis or they think about the whole system. You think, my goodness, I can control me. That’s hard enough. It’s how can I then tackle the whole system. And it’s mindboggling when you think about how we need to change the economy and change society and such in order to be more sustainable.

And so, I like to point people to what I think of as almost a Goldilocks region. Not just the individual level; that’s not the only place you want to look. And certainly not the whole system because we can’t really — that’s too big. But right in between, at the level of organizations, of even just parts of organizations, lots of people work in organizations where things they do at work can affect the degree to which their organization does things that contribute to sustainability. And that’s where I like to point people to focus their attention.

Kevin Cool: If individuals within an organization want their organization to be more active, more effective, to be more part of the solution, what levers can they pull? What actions can they take?

William Barnett: Of course, that depends on your job. And even then, I’ve delivered this message before, and I’ve had folks come back to me and say, “Oh, well, now we recycle at work,” or “Now we are careful about maybe not flying to business trips if we could do it on a Zoom call as much as we’re not always wanting to be on Zoom,” and such. Well, look, there’s nothing wrong with that, but let’s go deeper. What about the actual products and services and functions that you and your company, what does it do?

And you think about it. We often think of the strategy of our company or the tactics of our company as if they’re all about achieving the company’s objectives. Well, for us to make for a sustainable world, all companies, all organizations need to build sustainability into the practices that we engage in at work. If you think about it, we do that all the time for other outcomes. You would say, of course I’m not going to do that. Well, I think we want to raise sustainability to that same ethical level of saying, yes, I want my organization to achieve its objectives, but we want to do it in a way that is sustainable.

Kevin Cool: So, what’s the role of leadership in that context? How do they foster that kind of behavior or those kinds of organizational strategies? Where does that bubble up from?

William Barnett: Sure. Well, in fact, let’s talk about leadership. And right now, I think most of the people listening to this podcast are thinking about somebody else when we say leadership. They think, yeah, let’s talk about leadership, and they’re pointing up to somebody who’s the CEO or the department general manager or whatever the level is above them. And I would encourage every single person listening to this podcast to take their finger and turn it back and point it at themselves. Each of us is a leader in his or her own way.

And maybe you’re only at the level of a project group and you’re quite low in your organization. Well, you lead by example with your peers. Or maybe you’re a couple of rungs up the ladder. Well then, you affect that part of your organization. It’s been shown that the behavior of people at work is most shaped by their immediate supervisor, whether they’re happy and satisfied with work, whether they enjoy work, whether there’s a subculture in their part of the organization. It’s affected by very localized leadership.

Just think about it. If you’re waking up worrying about work at night, it’s probably because of somebody who’s only one rung on the ladder above you or maybe right level with you. Leadership makes a difference at all levels. So, that’s one of the first things is we each have to own our part in the game.

Kevin Cool: So, we’re talking about organizations changing, adapting, and you’ve made the point many times that the breakthroughs have to be large and transformative. And you are an expert on innovation. So, let’s talk about what we need to get to that transformational level of change.

William Barnett: We want both incremental change and transformational change, but the difference in how they feel at work is significant. Let me go ahead and speak by example here. When you’re at work and you’re thinking of an innovation, if it’s an innovation that you can go forward with easily and you can get support for and you know they’ll be backing and you’ll be able to execute on this pretty quickly, it’s probably an incremental change. Because by definition, we tend to like things that are consistent with all the other practices in our organization.

Now if you can reduce your organization’s carbon footprint or the carbon footprints of the suppliers and distribution channels at your organization, that larger impact, by incremental change, you absolutely ought to do it. And we’ve seen that happen. If you go back to the climate scientists’ projections in the 2000s, in that early 2000 to 2010 period, we are actually on a much better trajectory now than the business-as-usual trajectory that was being painted back then.

So, what got better, you might ask. Well, what got better is people began to wake up to the fact that we are affecting the world by our mass production and consumption activities and we have to do something about it. So, lots of incremental changes have happened that have brought down the carbon footprints of many companies. And lots of consumer behavior have changed that’s brought down the carbon footprints of many people, but it’s still not enough.

Over and above incremental change, the feel-good changes, every workplace has to consider changes that don’t feel good. That’s how you know a change is transformational. If it would be disruptive, if it would make it difficult to engage in business-as-usual, that’s a good sign. That means it’s a transformational change.

Maybe, for example, you’re a building contracting organization, and you’re going to start using a building material that would require a rework of many of your designs, but it’s a building material that uses far less cement. Well, that kind of an innovation has a much smaller carbon footprint, and yes, it’s going to require then that you rework your approach to design. That makes it a more transformational change, however. So, the measure of it is that you’re uncomfortable with it, it’s going to cause you a lot of trouble at work, that means you’re making a bigger difference.

Kevin Cool: So, why is it the case that targeted innovations or something that has a specific goal or outcome in mind is not as good at leading to big breakthroughs?

William Barnett: Yeah, that’s a tough question and folks struggle with this. Let’s make the distinction. Whenever there’s an innovation, you can go about coming up with something new in one or two ways. You can start with what you’re good at, what your organization’s good at, and then try to figure out where you will apply that to make the world a better place, make the world more sustainable, or you can start with the outcome that you want.

When you start with the outcome and then work back to what you can contribute to that outcome, you typically don’t generate any surprises because you’ve already started with what it is you want to produce. And you might be able to produce a solution for that or you might not be able to produce a solution. When you start with what you’re good at and then try to figure out how it can contribute to sustainability, the sky is the limit. Now it’s ironic because when you take this approach, it actually increases the rate at which you might also fail because it’s riskier, because what you’re good at may not be very easily applied in this direction.

And I’ll give you an example. I was in Tel Aviv at a conference of climate tech startups. Now the Israeli government has done something interesting. They have a lot of startups in Israel.

What’s interesting is the thought the camaraderie formed at that young age among highly educated engineers especially, but people of various backgrounds, has led to this Israeli miracle of startups. Some people call it startup nation in Israel. And it’s really phenomenal the number of startups coming out of Israel. Problem is, these are young folks starting these companies, and that meant you got a lot of companies that were doing things that young people know about like video games.

Well, look, I like video games as much as the next person, but there’s a point at which you wonder how much of our entrepreneurial effort ought to go into a new scooter-based deliver service or video game. And the Israeli government, as well as the NGOs in Israel that are working on their startup nation, have the same concern. So, what’s been interesting is over the last few years, they’ve put some policies in place to incentivize entrepreneurs to take whatever it is they’re good at and see whether they can find a sustainability application for that. What you end up getting is a very wide variety of such applications.

As I was saying, I was at this gathering of startups in Tel Aviv. And you had biodegradable plastics that are flourishing in terms of some of the startups that were involved. Yeah, you had technologies that can be used for carbon capture and removal that are based on oceans and the biology of ocean organisms that some scientists have worked on.

And really the list goes on. A wide variety of technologies that initially weren’t developed in order to serve the purposes of sustainability, but when applied to sustainability it led to some really surprising solutions that we otherwise would not have expected. So, in a sense, I’m good with targeting. Just start with what you’re good at as opposed to starting with the outcome.

Kevin Cool: You had a line that said we need to promote foolishness to get the volume of ideas that we need and to — I think the way you described it was we need foolishness to get genius.

William Barnett: Look, when it comes down to it, we are terrible at predicting. The track record shows this. The good news is we’re really good at retrospectively rationalizing all those things we didn’t predict. And so, we can make sense out of things as they get discovered. The question is how do they get discovered.

Well, it’s tempting when you look at our retrospective rationalizations of all the discoveries to think that we saw it coming. People like to call Steve Jobs a visionary, for example. But Steve Jobs himself was famous for saying that, in fact, you cannot connect the dots looking forward. You can only connect the dots looking backwards, and that tells you the map to follow looking forwards. Because the surprises that come along are typically vastly more impressive than anything our limited imaginations could have conceived of as we look forward.

So, what does that mean in terms of innovation? Well, we’re bad at predicting. So, focus less on whether or not your ideas are agreed to by everybody. If people are agreeing with your ideas, that’s actually a bad sign, because that means your ideas are completely consistent with our outlook right now. Think of those as consensus ideas. You’re much better off with non-consensus thinking. The people who developed the Internet didn’t think it was necessary. And the list goes on. We don’t predict well.

So, what you really want to do is try to make sure that whatever ideas you’re putting forward are unique, are non-consensus. If they’re non-consensus, they might well be foolish. But if they’re right, they’re going to be genius. In that sense, foolishness is the price of genius. Organizations that create lots of foolishness also create a lot of genius.

And so, directed to climate change, directed to sustainability, what kind of system creates these kinds of highly variable, some really crazy, some really genius ideas? That comes when you start with what you’re good at and then try to figure out how to find sustainability applications for that as opposed to starting with the solution and then figuring out how to come up with that solution one way or another.

Kevin Cool: So, is making that happen a matter of incentives? Is it a culture shift? Because organizations obviously aren’t in the business of failing. How do you set expectations or create a culture in which that can prosper?

William Barnett: You have to do it through action. I’ll quote one particular leader — I’ll leave his name out. He was a CEO of a giant company somewhere in the Bay Area, I can tell you that much. And one of my former students had become his head of strategy, so she had me in to talk with him. And we were talking about innovation. And he looked up from his desk and he’s, “Oh yeah, Barnett. Yeah, come on in.”

He says, “Yeah, I read your thing.” He said, “Yeah, I want innovation and I want to make sure that we think outside of the box.” And he was saying all this. It looked like he was possessed, when you’re in a movie when the person seems to have been taken over by — It was his chief of strategy was forcing him to say these words, and she was watching him. He was saying all the right words.

And finally, somewhere in the middle of this, he pounds the table and he says, “But I want good innovation!” It was as if his skin had peeled open and he had come out, right? And I thought, oh my goodness, thank goodness. I thought it was going to take me an hour to get to his actual feelings. And that’s how people usually feel. They fell I want innovation, but I want the winners.

The trouble is if you punish all the failures — and you mention incentive systems. If you put incentives in place that make sure that you get nailed any time something doesn’t go well, people aren’t stupid. They’re going to keep their head under their desk and they’re going to mind their p’s and q’s. They don’t want to be shown to be a fool in an organization that’s going to penalize —

And they go home. Maybe somebody at home is relying on them. And they look at the guy and say, “You could’ve stayed at your desk, but you had to be Don Quixote. And ever since you went to that Stanford seminar or whatever possessed you to be so foolish at work.” So, people aren’t stupid. They calm themselves. They keep themselves inside a box because they don’t want to get nailed.

So, to really make a culture that allows for innovation, you have to allow that many of the ideas we come up with won’t work. Now the way to make that approach work out in a world where we don’t have limitless resources is to keep your experiments small. That keeps your failures quick and inexpensive. You don’t want to go out and try to scale an innovation before you’ve tested the underlying hypotheses that are involved in it.

It’s a famous problem in innovation that folks will test an innovation by scaling it. And when you do that, your failures are gigantic and expensive, and then they contaminate the culture of the organization because everybody says, “Oh, you remember that boondoggle. You remember that huge amount of money that we wasted on that innovation.” And in fact, you want to systemize failure, make it normal, because it is a normal part of an innovative organization’s life.

Kevin Cool: Bill, you’ve been at Stanford since the early ’90s before the tech boom changed everything. Do you think the appetite for failure at Silicon Valley companies has evolved now that we’ve seen so many unintended consequences of transformative technology?

William Barnett: So, I remember giving a lecture, and I remember for sure it was in 1998. One of my students who’s a very bright MBA student, she was in the front row, and she raised her hand and she said, “Professor Barnett,” which, of course, when you say it that way is probably not the most respectful thing you’ll hear during your day, but it’s fine. I like a student who’s going to be challenging.

And I had been just talking about disruption, and how change needs to be difficult, and you need to have failure in order to get success. And she said to me, “This sounds like a theory of the olden days.” Now mind you, this is 1998. I had hair, okay? So, if you think I look old now, and yet I was already, in her mind, the old codger, right? And I was dismayed. I said, “What do you mean?” And of course, 1998, we were in the boom. I mean, it was high times in technology. And she said, “Well, now we have Microsoft.” And the room all nodded.

Now a lot of people don’t realize that a big goal for founders of companies back in the late ’90s was to get acquired by Microsoft. The competition was over; Microsoft had won. And the thought was, industrial revolution as we know it had essentially come to an end. So, people weren’t worried about failure nearly as much even though we were actually right at the precipice of what we would now think of as the technology boom. That we actually thought the technology boom was over by ‘98. We had just had it. But that was nothing compared to what was next.

We are terrible at predicting. Every time we think the whole game is now settled, it’s because we’ve managed to retrospectively rationalize what we now see around us before the next set of surprises comes along. My intention is to make sure that the next set of surprises that comes along are surprises that show us a more sustainable world than the world we would’ve had otherwise.

Kevin Cool: If/Then is produced by Jesse Baker and Eric Nuzum of Magnificent Noise for Stanford Graduate School of Business. Our show is produced by Jim Colgan and Julia Natt. Mixing and sound design by Kristin Mueller. From Stanford GSB, Jenny Luna, Sorel Husbands Denholtz and Elizabeth Wyleczuk-Stern.

If you enjoyed this conversation, we’d appreciate you sharing this with others who might be interested and hope you’ll try some of the other episodes in this series. For more on our professors and their research, or to discover more podcasts coming out of Stanford GSB, visit our website at gsb.stanford.edu. Find more on our YouTube channel. You can follow us on social media at StanfordGSB. I’m Kevin Cool.