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Using Futures Thinking To Navigate Disruptive Shifts

After the release of the world’s first mass-market ‘personal navigation device’ in 2004, TomTom’s stock soared, reaching a peak of $65/share in 2007. However, the landscape shifted dramatically when Google launched its Maps app in 2007, effectively transforming every smartphone into a personal navigation device. Within 2 years, TomTom’s stock fell below $3. While TomTom was eventually able to pivot and change their business model, their initial dismissal of the threat posed by the rise of smartphone based navigation apps was very costly. This failure was not due to a lack of technological capability but rather a lack of strategic foresight to anticipate and adapt to disruptive technology.

Innovation is not just about responding to current needs but also anticipating and preparing for disruptive shifts, like the rise of generative AI. However, preparing for disruptive shifts is a very tricky problem because the mental models we use to make decisions in normal, predictive times don’t work in disruptive times. Product planning in such times has to go beyond predicting the future (which often turns out to be incorrect), to planning for multiple plausible scenarios. This is where futures thinking can be a useful tool. 

Futures thinking is a strategic approach to uncovering multiple possibilities, with the aim of creating a preferred future. It ties closely to innovation – once we identify a desirable (and plausible) future, we have a clearer roadmap of the problems we need to solve in order to reach that future. 

So how do you develop futures thinking? It starts with first figuring out (or even deciding) a vision for the future and then understanding what forces enable or thwart that vision. Depending on how likely and how important certain trends for a particular vision, one can arrive at plausible scenarios of the future. These scenarios can then guide what kinds of ideas and products to invest in. 

Future Archetypes

When it comes to our vision of the future, we all hold one or more of common archetypes which  dominate our imagined future thinking. Below are the five common future archetypes viewed through the lens of AI:

  • Progress: A tech-driven world with humans at the center, emphasizing rationality and innovation. AI in this future enhances human productivity, creativity, and decision-making.  
  • Collapse: A darker vision where AI exacerbates inequality, destabilizes jobs, and concentrates power, pushing society to a breaking point.
  • Gaia: A partnership-driven future where AI helps repair damage to the planet and fosters inclusive, harmonious systems between humans, nature, and technology.
  • Globalism: A borderless, interconnected future where AI powers collaboration across economies and cultures, breaking down barriers to knowledge, trade, and innovation.
  • Back to the Future: Nostalgia for simpler times, where AI’s rapid advancements are rejected in favor of human-centered, low-tech solutions to protect societal stability.

Trends

There are several key market, technology and social trends that impact the development of AI in both positive and negative ways. Here are a few sample trends:

  • Technology Improvements: The AI hardware market, encompassing GPUs and specialized AI accelerators, is projected to grow significantly indicating growth of computational power. AI models are expected to continue improving with more enhanced reasoning skills and capabilities. 
  • Regulation Focus: The number of AI-related regulations in the U.S. has risen significantly, with 25 AI-related regulations in 2023, up from just one in 2016, reflecting a growing focus on responsible AI development.
  • Computational Costs: Training large AI models is resource-intensive, requiring significant computational power, energy, and financial investment. OpenAI’s GPT-4 used an estimated $78 million worth of compute to train, while Google’s Gemini Ultra cost $191 million for compute.
  • Public Trust: People and companies may be hesitant to adopt AI due to various reasons like biased algorithms, privacy concerns, or fear of widespread job losses. 
  • AI Investment: Despite a decline in overall AI private investment last year, funding for generative AI surged, nearly octupling from 2022 to reach $25.2 billion, highlighting increased investment in AI technologies.

Each of these trends can either contribute to a future or become a barrier. The likelihood of each trend plays a part in which of the futures are more plausible. 

Future Scenario Planning

To determine plausible future scenarios, leaders need to evaluate trends against each vision of the future. For example, consider the future archetype of “progress” where AI leads to greater productivity and innovation. Improvements in technology, like better models or better GPUs, clearly push us towards this future. However, issues like algorithmic biases or security concerns can erode trust in the technology and slow down adoption rates. If this is a preferred vision of the future, then actively addressing these barriers during the development process can ensure that we keep marching in the right direction. While this was an overly simplified example, a more thorough analysis that incorporates additional relevant trends can start to reveal the plausibility of different scenarios.  

One challenge in future scenario planning is that given the complex nature of the problem, there is no good way to accurately determine the likelihood of each trend and its contribution to each future archetype. This is where swarm intelligence might be useful. Groups of people are often better at predicting than relying on experts. Training employees on futures thinking and tapping their individual unique insights might provide better signals on what scenarios are more likely to happen in the future. 

As artificial intelligence redefines industries, businesses must integrate strategic foresight into their innovation frameworks to thrive in uncertain and fast-changing landscapes. By explicitly using future archetypes and integrating them with current and expected trends, we can start to identify what scenarios are most likely to play out in the future. These scenarios can then help create more efficient product innovation roadmaps.  

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Organizational Play: The Unexpected Path to Radical Innovation

In a captivating TED talk, author Steven Johnson illustrates how the invention of a seemingly simple flute by cavemen 40,000 years ago unexpectedly paved the way for the development of the modern computer. A series of inventions—music boxes, toy robots, and the like—initially perceived as mere amusements, laid the groundwork for innovations that would ultimately revolutionize entire industries. As he explains, “Necessity isn’t always the mother of invention. The playful state of mind is fundamentally exploratory, seeking out new possibilities in the world around us. And that seeking is why so many experiences that started with simple delight and amusement eventually led us to profound breakthroughs.”

Yet, the power of play as a catalyst for innovation is often overlooked in the corporate world. When most companies think about innovation, their first instinct is to lean heavily on market research, analyzing customer feedback, and refining processes to meet immediate needs. However, this approach often leads to incremental improvements rather than groundbreaking advancements.

The Rise of AI and the Need for Transformational Innovation

With the proliferation of generative AI in recent years, most companies are adopting AI in their workflows, leading to more efficient or more capable product offerings (barring current AI challenges like hallucinations). But the more transformational breakthroughs — the killer apps — remain elusive.

The challenge lies in the fact that most company structures and processes are geared toward incremental innovation. Trying to squeeze out transformational innovation from an organizational machinery fine-tuned for incrementalism is a difficult task. The very elements that enable transformative breakthroughs are often the exact opposite of what most companies are structured for.

The Unpredictability of Transformational Ideas

Transformational ideas are inherently difficult to predict, even by the people who might have worked on an earlier, related problem. When the Musa brothers in Baghdad made the first programmable music box, using interchangeable metal cylinders to encode music, they could not have predicted that their invention would later inspire the French inventor, Jacques de Vaucanson, to use the same mechanism to create programmable looms. This unexpected connection highlights the unpredictable nature of innovation.

In other words, companies that rely solely on predicting the next big thing will likely miss out on creating breakthrough ideas. Their existing processes, which often rely heavily on customer feedback and market research, can only lead to predictable improvements on existing products.

Solutions in Search of Problems

Many offbeat ideas are quickly shut down with questions like “What is the customer pain point?” or “This looks like a solution looking for a problem.” While this feedback is relevant when the goal is to evolve existing products, it can stifle radical innovation. Most radical ideas are actually the reverse – they are solutions looking for problems.

Consider the invention of the sticky note. Spencer Silver, a scientist at 3M, was working on making a super-strong adhesive but accidentally ended up creating a weak adhesive that could be peeled off easily and was reusable. He was intrigued by this new adhesive and spent several years giving seminars and talking to people within the company to find ways to commercialize it, but couldn’t find a good use. It wasn’t until another colleague, Art Fry, recognized the potential of the adhesive as a bookmark that the sticky note was born. This example illustrates the importance of recognizing the potential of solutions even before a clear problem has been identified.

Instead of relying solely on customer feedback, companies need to develop a different approach to evaluate solutions that don’t yet have a well-defined problem. One effective strategy is to focus on complexity. If a solution was non-trivial and involved overcoming significant challenges, it could be a good candidate for creating a future competitive advantage.

The Exploration vs. Exploitation Mindset

To thrive in their environments, most animals toggle between exploration and exploitation. Exploration, akin to play, empowers animals to uncover new possibilities and problem-solving approaches. Research suggests that animals engaging in more play are often better prepared to adapt to environmental challenges, boosting their survival and reproductive prospects.

However, when faced with threats, exploration can be risky. In such situations, we tend to resort to using our existing knowledge to solve the immediate problem. This natural tendency highlights the tension between exploration and exploitation.

This biological function of exploration—stepping away from immediate survival needs to tinker with novel ideas—closely aligns with what companies must do to thrive in an uncertain and competitive landscape. Play allows us to probe beyond the “local optima,” or safe solutions, to discover entirely new paradigms. 

However, the conditions under which successful exploration occurs are very different from the exploitation phase. Exploration works best when people feel safe and supported in their environment. A playful, low-stress environment is essential for serious play to thrive.

A New Path For Radical Innovation

Successfully balancing transformational and incremental innovation is a persistent challenge for organizations. While many companies excel at incremental innovation, they often struggle to cultivate an environment that fosters radical breakthroughs. Existing approaches, such as corporate hackathons or Google’s “20% time,” have often fallen short of their intended goals. These initiatives, while valuable in promoting experimentation, often fail to fully embrace the conditions necessary for deep exploration.

What if we could create a new model, an “innovation sabbatical” for radical innovation to thrive? Imagine an extended period, lasting 2-3 months each year, where employees get a a dedicated space for radical exploration, free from the daily demands of their regular work. This would act as an extended hackathon, but with a crucial difference: it would be designed to foster a distinct culture that prioritizes deep exploration. Within this sabbatical environment, traditional hierarchies would fade, replaced by an emphasis on collaboration and a playful, low-stress atmosphere. Evaluation would shift away from immediate business needs, focusing instead on the ingenuity and complexity of the ideas generated. 

The goal with an innovation sabbatical is not for companies to predict the next big idea but to create an additional pathway where transformational ideas get a chance to flourish by ensuring that resources, incentives and motivation are all aligned in the right way.  

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Cultivating an Entrepreneurial Mindset: Lessons from Visionary Leaders

With the rapidly evolving business landscape in the age of AI, the ability to innovate and adapt is paramount. For CEOs and business leaders, cultivating an entrepreneurial mindset within their organizations is more than a strategy—it’s a necessity. This mindset, characterized by agility, creativity, and resilience, can be the difference between thriving and merely surviving. Drawing on the examples of visionary leaders like Yvon Chouinard, Tony Hsieh, and Satya Nadella, we can see how adopting an entrepreneurial mindset can drive success.

What Is An Entrepreneurial Mindset?

Most people have an intuitive understanding of entrepreneurial mindset. A more formal definition, following an exhaustive review of published work, defines entrepreneurial mindset as “a cognitive perspective that enables an individual to create value by recognizing and acting on opportunities, making decisions with limited information, and remaining adaptable and resilient in conditions that are often uncertain and complex.”

In hypercompetitive markets, becoming more entrepreneurial is crucial for adapting to emerging threats and staying ahead of competitors. Such strategic entrepreneurship requires a special kind of leadership—entrepreneurial leadership. 

Individuals exhibiting such leadership behaviors are pivotal in steering their organizations towards innovation as a company’s culture and leader’s entrepreneurial mindset are interconnected. This relationship between culture and mindset is recursive, and modeled as an entrepreneurial spiral. The bottom-up process of the spiral represents the influence that a company’s entrepreneurial culture has on the leader’s mindset. Simultaneously, the leader’s entrepreneurial mindset can have a top-down effect on the culture, fostering an environment that is more entrepreneurial. Both the top-down and bottom-up processes can result in a positive feedback loop that grows a company into a more innovative state. 

Key Traits Of Entrepreneurial Leaders

The essence of an entrepreneurial leader can be distilled into three core entrepreneurial mindsets: people-oriented,  purpose-oriented, and learning-oriented. Visionary leaders such as Yvon Chouinard of Patagonia, Tony Hsieh of Zappos, and Satya Nadella of Microsoft exemplify these traits, having guided their companies to remarkable achievements.

People-Oriented Mindset: Tony Hsieh

A people-oriented mindset has two factors: staying inclusive and open; and being positive and appreciative of employees. This mindset fosters a positive and supportive work environment, where employees feel valued and empowered. Leaders with a people-oriented mindset are more likely to win the support and trust of their employees and team members.

Tony Hsieh, the late CEO of Zappos, was an example of a leader with a people-oriented mindset. He made employee happiness a cornerstone of Zappos’s culture. Hsieh implemented a flat organizational structure at Zappos, which minimized hierarchy and encouraged autonomy among employees. This empowerment allowed team members to make decisions that they felt were in the best interest of customers, fostering a sense of ownership and responsibility. Hsieh’s emphasis on employee satisfaction also led to the implementation of groundbreaking policies at Zappos, such as offering new hires a “quitting bonus” if they didn’t feel aligned with the company’s culture. This bold move ensured that the team remained highly motivated and committed, fostering an environment where innovation and exceptional customer service could flourish.

Purpose-Oriented Mindset: Yvon Chouinard

A purpose-oriented mindset has two main aspects: keeping the end goal in mind and having the endurance to see it through. Leaders with this mindset have a unique ability to balance their focus on the objective with the patience necessary to achieve it. This equilibrium is rooted in their deep commitment to their purpose.

Patagonia’s founder, Yvon Chouinard, is an excellent example of a purpose-driven leader. He has instilled in his company a strong dedication to environmental preservation. Patagonia’s initiatives, which range from using recycled materials in their products to supporting environmental causes, reflect Chouinard’s unwavering belief in sustainability. Under his leadership, Patagonia has not only talked the talk but also walked the walk, setting an example for the industry and consumers alike. Patagonia’s efforts, such as the “1% for the Planet” pledge, which commits the company to donating 1% of its sales to environmental groups, have inspired other businesses to follow suit. Patagonia’s dedication to environmental and social issues has also resonated with consumers, resulting in a loyal customer base that has contributed to the company’s financial success.

Learning-Oriented Mindset: Satya Nadella

A learning-oriented mindset is characterized by two key attributes: an ability to pick signals from all around and an inclination to take risks. A learning-oriented mindset allows leaders to seize opportunities. Moreover, the calculated risks taken by these leaders inspire their employees to follow suit.

Satya Nadella’s success at Microsoft is a testament to the power of a learning-oriented mindset. He was quick to recognize the potential of cloud computing, and steered Microsoft’s efforts in that direction making Azure a major competitor to Amazon Web Services. More recently, Microsoft’s partnership with OpenAI, and his push to integrate advanced AI technologies into its various offerings, demonstrated Nadella’s ability to act decisively on emerging technological trends. This strategic move positioned Microsoft at the forefront of AI development. Nadella’s initiative to foster a growth mindset at Microsoft, encouraging employees to embrace a “learn-it-all” as opposed to a “know-it-all” approach, highlights his commitment to creating a culture of continuous learning, experimentation, and adaptation. By fostering an environment that values learning and growth, Nadella has revitalized Microsoft’s innovation engine. 

Blueprint For Creating Innovative Companies

The journey to fostering an entrepreneurial mindset within an organization is multifaceted. It requires leaders to be purpose-driven, people-oriented, and committed to continuous learning. Leaders who embrace these principles can transform their organizations, creating a culture that not only survives but thrives in the face of change. To cultivate an entrepreneurial mindset, leaders should focus on embedding these traits within their organizational culture. Here are  three ways leaders can adopt to build a more entrepreneurial culture. 

  • Embrace a clear and compelling purpose. Leaders should articulate a clear and compelling purpose for their organization that employees can rally behind. This purpose should be something that employees are passionate about and believe in, and it should provide a sense of direction and purpose for their work. An inspiring purpose goes beyond profits or mission statements and addresses the “why” of a company’s existence. For Patagonia, environmental sustainability is a purpose that goes beyond individual or company interests which makes it inspiring for employees to adopt. 
  • Encourage open communication and collaboration. Leaders should encourage open communication and collaboration within their organizations. This open communication needs to be bidirectional allowing employees to also express their concerns, challenge assumptions and share their own ideas. The bottom-up part of communication helps leaders get better signals about new technologies and use cases that eventually aid their strategic thinking. In contrast to Nadella, Steve Ballmer mocked the iPhone when it first came out, and completely underestimated its market success. Allowing open collaboration to test out experimental ideas helps identify new areas of innovation — signals that leaders can use in strategic planning.
  • Create a positive and supportive work environment. Leaders should create a positive and supportive work environment where employees feel valued and respected. What made Zappos a great place to work was the autonomy that Hsieh provided to all employees, empowering them to go beyond scripted responses and make on-the-spot decisions that were in the best interests of the customer. As a result, employee turnover at Zappos was significantly lower compared to industry average.

By following these strategies, business leaders can create a high-performing and innovative workplace.

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Why Humility Is The Most Important Trait for Creative Leadership

Indra Nooyi, the former CEO of PepsiCo., took over the reins of the company in 2006. During the twelve years of her tenure, Pepsi’s revenue grew over 80%, cementing her reputation as a highly successful CEO. Nooyi led with a “Performance with a Purpose” strategy and drove a shift towards healthier food options to reduce obesity rates. But it was not just her strategic insights that made her a great leader, her humility played an equally big role.  

Among the more unconventional things she did as a leader was writing personal letters to the parents of her senior executives, thanking them for the “gift” of their children to the company. She got the idea when she became a CEO and saw people complimenting her mother on “doing a good job with her daughter”. It made her realize that parents often don’t get acknowledged for the success of their children. The letters, which ran into several hundred a year, honored the parents and cemented a stronger bond between employees and the company. 

What is Humility?

Humility is defined as a “relatively stable trait that is grounded in a self-view that something greater than the self exists.” It’s easy to see Nooyi’s humility in this context. She didn’t pat herself on the back, but deeply appreciated the contributions of her employees and their families, for the company’s success. 

In practice, this view that something greater than self exists, translates to three factors that define the conceptual core of humility:

  • Accurate Self Awareness:  Humble leaders have a realistic view of themselves and are more willing to accept their limitations. As a result, they do not have a strong need to dominate over others. 
  • Appreciation of Others: Humble leaders acknowledge and appreciate other people’s strengths and views. 
  • Openness to Feedback: Humble leaders are more open-minded and willing to learn from others. They can take critical feedback and use that to improve their leadership style.

Role of Humility in Creative Leadership

While humility is a healthy trait in itself, it is key in leadership roles where innovation is important. Research shows that “as individuals get promoted into leadership positions, they gain power and this power has some debilitating effects on the idea-generating process.” In particular, when people gain power they listen less carefully, are less open to others perspectives, and have less ability to handle complexity. 

In other words, when leaders lack humility, they are more likely to brush off someone’s idea quickly without exploring its full potential. Creative ideas emerge from integrating multiple perspectives, which requires a humble mindset (willingness to listen) and a cognitive aspect (to create new internal mental models). Without humility, it is hard to build on each others’ ideas that lead to groundbreaking innovation. 

Strategies to Build More Humility and Creativity

Humility is a prerequisite to being a more creative leader. Without humility it is hard to synthesize new ideas from multiple different perspectives. Here are three strategies that can help you build more humility and lead to more innovation from your team or organization. 

  • Pause before rejecting an idea: Imagine one of your reports comes to you with an idea. As soon as you hear the idea, you spot the flaws in the idea and your first impulse is to quickly dismiss it. Instead of rejecting the idea right away, pause and start digging deeper with a genuine goal to understand the intent behind the idea. Explore ways in which the flaws can be removed while retaining the positive elements. If this exploration leads to something meaningful, make a mental note about it. Over time, you might notice several instances that led to better ideas which will help build more appreciation for others’ ideas. 
  • Let others lead in group meetings: When someone raises a problem in a group meeting, it can be tempting as a leader to quickly jump into providing a solution. Instead, make a norm where you open up the problem and invite solutions from others before sharing your own. Only when you see you have a perspective or an idea that is different from what’s been suggested before, share it with the group. Every time you see “your” idea proposed by someone else or an even better idea from the group, make a mental note about it. This can help build self-awareness of your abilities and limitations. 
  • Steer conversations towards co-creation: Very often, in group meetings, people focus more on picking one idea vs. another. However, the most innovative ideas come from the merging of different concepts and perspectives. As a leader, focus on ideas that have merit and guide your team to synthesizing a more innovative idea by combining multiple good ones. This exercise can help build complex problem solving skills.
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Beyond Extroversion: The Inner Playfulness Of Genius

When people talk about creativity, outgoing personalities invariably come into the picture. It seems to be commonly accepted that extraverted, playful people tend to be more creative. But is that really true?

Mozart and Newton personify the boundary-pushing, Big-C Creativity in very different disciplines of music and science. They both made immeasurable contributions to their fields and inspired many others over generations to follow their footsteps. But not only were their domains vastly different, their personalities were too. 

Mozart was an extrovert with a bawdy sense of humor, who loved to party, drink and play pranks. He often got into trouble due to his eccentric behavior. Newton, on the other hand, was a socially awkward introvert. He had few friends and preferred to spend time alone. 

Of these two – Mozart and Newton – who do you think was more creative?

The question is obviously ridiculous. Both of them were creative giants who radically transformed their own fields. While externally they couldn’t be more different, internally they were likely much more alike. 

Most people mistake extroverted, playful people as being more creative but that is not necessarily true. It’s not the external playfulness that matters but the internal playfulness with ideas – something that both extroverts and introverts are capable of doing. Creativity emerges when you take ideas and perform mental transformations on them like changing boundaries or combining with other ideas, or in other words, when you playfully manipulate them. Someone could be a playful person on the surface, but without doing the internal playful work with ideas, they are not going to come up with groundbreaking ideas. 

This playfulness with ideas is what makes Mozart and Newton similar. With Die Entführung aus dem Serail, Mozart pushed the boundaries on what an opera was expected to be at the time. He wrote it in German instead of Italian, he used an unexpected and controversial setting of a Turkish harem, and the opera incorporated elements of Turkish music. Those were controversial ideas at the time but eventually the opera became a huge success. Similarly, in his cannonball thought experiment, Newton pushed the limit of projectile motion which allowed him to make the connection between planetary motion and objects falling on Earth. He had to simplify objects, reducing them to mathematical points to prove that the same universal law of gravitation worked for all objects. According to an anecdote, when an admirer asked Newton how he made his discoveries, he replied “By always thinking unto them.”

So, if extraversion doesn’t predict creative output, is there any other personality trait that does? 

The trait of “Openness/Intellect” – one of the Big 5 personality traits – is the only trait that shows a consistent relation to creativity. A study by Kaufmann and others found that “artistic creativity draws more heavily on experiential Type 1 processes associated with Openness (e.g., perceptual, aesthetic, and implicit learning processes), whereas scientific creativity relies more heavily on Type 2 processes associated with Intellect and divergent thinking.” Incidentally, their study did find an unexpected correlation between extraversion and artistic creativity but not scientific creativity. 

When companies strive to make a more creative and innovative culture, they often fall into the same trap. They focus on external things – like foosball tables or bean bags – to create a fun, playful vibe in the hope that it will lead people to think more creatively. Their interviewing and hiring processes tend to favor extroversion. But without creating an environment where offbeat ideas are encouraged, debated and experimented, groundbreaking innovation is not likely to happen. Companies might think that they encourage play but what they create is a playpen and not a playground. 

Mitch Resnick, Professor and Director of the Lifelong Kindergarten group at MIT, uses the metaphor of playpen vs playground to differentiate the different kinds of play they support. A playpen might have interesting toys to play with but it is a restrictive environment with limited autonomy and freedom of exploration, whereas a playground promotes open exploration, problem solving and creativity. Needless to say, a playpen stifles creativity while a playground nurtures it. 

To build more innovative cultures, companies need to hire people who are curious and open to new ideas, which isn’t related to extroversion or introversion. And then they need to create intellectually stimulating environments where people can freely play with ideas, debate them with others and explore their potential.