A clay cup sits in front of you.

How does its function change when it is full versus when it is empty? A full cup is useful in that you can drink from it; you can use the resources inside it. But what use does an empty cup have? You cannot drink from it, so how can it be useful? Which would the optimist—or the pessimist—choose? Is it better to be half empty or half full?

Conversely, what if you wish to add more liquid to the vessel? Would you want it to be empty or full? What is the function of the liquid then? Its value?

Take these questions in for a moment. Chew them, taste them, savor them.

Done? Good.

What is that cup? The vessel, according to the old Zen metaphor we’re summoning, is your mind. It can be full or empty. Each state has its own implications.

Which mind do you want? Which mind do you want your team to have?

If you want to be thought an expert—which, if you’re reading this book, part of you does—you may privilege the full mind. After all, it’s impressive to know many things, to be a fount of knowledge. However, expertise implies a kind of rigidity. If your cup is full, it cannot accept more water.

As a society of professionals, we’ve received educations previously reserved for royalty, made travels once only known to explorers, and developed skills in ourselves that are indistinguishable from magic. However, all these concepts we’ve accumulated are more map than territory: if we fixate our conception of the world on the systems that we build to represent it, we can lose sight of the world. Instead of seeing the world, we see only our ideas about the world. Since we’ve established that we have all the insight, we don’t allow more to come in.

This is why we need to maintain what Buddhists refer to as beginner’s mind: a certain playful absence of assumptions. As Shunyru Suzuki writes, “In the beginner’s mind there are many possibilities, but in the expert’s there are few.”² And since innovation is the result of successive ventures into possibility—as we’ll get into later—we’re motivated to immerse ourselves in possibility, to, as Emily Dickinson wrote, “dwell in possibility,” for it is a “fairer house than prose.”

Beginner’s mind, then, is a practice of approaching our experiences empty of assumptions. This is one of the keys—and products—of mindfulness meditation, which we’ll discuss further in Chapter 2. Essentially, beginner’s mind is an empty vessel waiting to be filled by the raw data of doing commerce and living life. In this way, we become more vulnerable to insight; since we don’t claim to have come to the final answer, we can more readily welcome new ones.

To paraphrase Adam Pisoni, Yammer’s chief of technology, whom we’ll get to know in Part II of this book, we have to assume that everything we think is right today will be wrong tomorrow. What this demands is a nuanced understanding of the timeless and the timely. Some parts of life are timeless, such as the nature of consciousness and the nature of relationships—this is why ancient wisdom about these fundamentals remains so deeply resonant—whereas other, more emergent aspects of life, such as technology, are intensely timely. For example, the phone you carry in your pocket today is markedly different from the one you carried five years ago, and we can assume it is different from the one you will have five years from now. We can still look to Socrates for insight into teaching as the transference of knowledge—and yet we wouldn’t consult him for insight into how satellite imaging transfers knowledge. Thus, we have our feet in two streams: the timeless and the timely. As entrepreneurs—that is, people who take full responsibility for our economic and psychological well-being—we need to develop an appreciation of the differences between the two.

It sounds a little old-fashioned to wring our hands at the fact that everything is changing so damn fast; instead, let’s adapt to volatility. To do this, we can appreciate the space within our empty cup, appreciate how little we can fully know about the present world and how much less we can know about what will come in five years. There’s a word for not knowing: ignorant. Although this word usually has a negative connotation—if someone called your authors ignorant, we’d leap to defend our fragile intellectual egos—we hold that it can be positive. We can be skillfully ignorant by acknowledging that this is a complex, maybe even opaque world in which we’re working. We can even get good at being ignorant: as individuals, we can build a skill set in skill acquisition, since we’ll need to be learning new skills as paradigms change. At an interpersonal and organizational level, we can surround ourselves with people who shine light onto our various blind spots and treat them in a way that encourages expansive, adaptive behavior. Such practices and strategies will be explored throughout this walk of a book we have before us.

ON NOT STANDING STILL

Somewhere along the way, people became convinced that stasis is safer than movement. Consistency feels comfortable; volatility is frightening. Therefore, consciously or not, we attempt to protect ourselves against life’s volatility by cultivating robustness in our lives and organizations. But as Nassim Taleb’s The Black Swan and the financial crisis it predicted have shown us, the most static systems are in fact the most fragile.³ But where does this volatility come from? And how do we adapt to it? Because if we’re going to lead our lives and our organizations in a way that’s actually in agreement with the world, we first have to understand what exactly it is we’re agreeing with.

In his 1942 book Capitalism, Socialism, and Democracy, the Austrian-American economist Joseph Schumpeter introduced the notion of the innovation economy, in which the market isn’t driven solely by efficiency, but by great shifts in supremacy. He characterized capitalism by its “violent bursts and catastrophes,” a process he colorfully dubbed “creative destruction.”⁴

Schumpeter saw the shifts occurring in the world in his day, the movement away from rigid standardization and toward the fluidity that we now know. He argued that evolving institutions, entrepreneurship, and technological change are at the heart of economic growth. He also said that the incentive to innovate is what makes capitalism the best economic system. We have to agree.

Since organizations and industries are going extinct, many unemployed people are seeking jobs that no longer exist. Although not every industry has been disrupted, every one has been altered by technology, whether it is energy, medicine, the military, transportation, or entertainment. Although we can look for the signs indicating which paradigm will be the next to be loosened, we cannot know for certain.

Creative destruction, as Schumpeter saw it, represents an ongoing shedding of skin within the market. As Thomas K. McCraw explains in Prophet of Innovation, his biography of the economist, Schumpeter saw capitalism as a system in which whole products, enterprises, and firms are swept away continuously. Beyond being the coiner of the term creative destruction, Schumpeter was the first person to talk seriously of business strategy, and he said that a strategy can attain its “true significance” only in the context of that stormy process. Creative destruction—the replacement of one product with another or one firm with another—is the essential character of capitalism.

The capitalism that exists today is not solely a matter of calculations of price (and the emphasis on efficacy that motivates) but also a matter of sweeping purges of obsolescence: one product replaces another, a worker replaces another, an industry replaces another. Schumpeter described this kind of competition powerfully, saying that it “strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.” If this sounds terrifying, that’s because it is. Entire industries can be swept away.

To top it off, we’re living in a global, increasingly interconnected economic and social environment. New technologies are changing fundamental relationships at an ever-accelerating pace. The developing world is becoming more a part of the developed world. Enabled by technology, developing nations are able to transform themselves over a few years into productive members of the international commercial society. As Vijay Govindarajan notes in Reverse Innovation, the inclusion of the global poor into our economic system will be a development of historical significance.⁵ Regardless of the locality you find yourself in, neither the competition nor the opportunities of these emerging markets can be ignored. More and more, there is only one connected system on the planet, and it is constantly reemerging, with sectors getting swept away.

So, then, the elephant in the room: How do we avoid getting swept away?

THE QUALITATIVE IS THE QUANTITATIVE

Something unprecedented happened in the Bay Area of California in the mid-1990s: there was, of course, the first dot-com boom. But within that boom, there was also research into what would make an organization go bust. Called the Stanford Project on Emerging Companies (SPEC), the longitudinal study led by professors James Baron and Michael Hannan documented the employment practices of nearly 200 young Silicon Valley firms and their subsequent performance.⁶

What’s intensely interesting about the research from the Silicon Valley of yore is the way that the qualitative, that is, “mushy” things such as culture and the way people within an organization relate to one another, can predict the quantitative, such as an organization’s chance of reaching an initial public offering and being able to continually grow after it. To that end, the authors named five different prevailing personality types for the cultures within organizations, which we paraphrase here:

 

1. Star. We want elite people doing elite work.

2. Commitment. We want people to be at home where they work and identify strongly with the company. We have emotional ties to the company.

3. Bureaucracy. We need everything to be documented and approved.

4. Engineering. We have technical people doing technical work.

5. Autocracy. We—management—run the company. You work hard, you get paid well.

 

These personality types had telling performance outcomes, especially in terms of who performed the best in the long term. Most germane to our discussion are the Star and Commitment types. In Star-oriented cultures, employees come on board because of the challenging work made available to them and the ability to work autonomously. In Commitment cultures, the employees have “emotional or familial” ties to the larger organization and are selected with great care for what one might call cultural fit.

The firms with the Star model were the least likely to go public, but if they did, they would do the best financially, whereas the Commitment-based companies were 200 percent more likely to have an IPO. The authors noted that the Star firms reminded them of Reggie Jackson, the Hall of Fame baseball player who hit 563 home runs—good enough to be thirteenth all time in career dingers—but also struck out 2,597 times. In contrast, Commitment companies are like Ted Williams, who had a high on-base percentage and slugging percentage but was slightly less likely to smash a home run.

“The biggest virtue of the Commitment model is that when employees are truly invested psychologically in the success and survival of the organization and their coworkers,” Baron wrote to us in an email, “then they are less likely to become disengaged either when there are initial indications of trouble or when they experience huge financial windfalls due to early success.”

The two types remind us of the tortoise and the hare: The Star-powered firm can move very quickly, gathering the best people to do the best work as fast as possible, but may end up foundering. One reason why Baron and Hannan suggest—and we’ll explore later—is that business life, especially start-up life, is tumultuous, and so the social system that can best cope with that volatility is one in which the members have the greatest support from one another: the Commitment mentality. To use another lens, the Star system is individualistic, whereas the Commitment system is collectivist, more other-oriented. This is why, as Baron and Hannan note, when the elite work starts to dry up, the elite workers may flee to a more challenging space, but the emotional investments made in the organization in a Commitment model will keep people as members of the group.

This knowledge helps us better see our path: since these are our own careers and working lives here, we want to be more like Ted Williams than Reggie Jackson, more like the tortoise than the hare. We want to be oriented to the long term. That long-term orientation, as Baron and Hannan’s research suggests, is something that springs from the relationships that constitute an organization. Therefore, our task is to find out what the qualities of these familial-type ties are that predict consistent, long-term performance and then instantiate them. This, too, will be one of the key quests in our journey.

But this is not an entirely new quest. Several research initiatives by the BTM Institute, BTM Corporation’s research think tank, have come up with similar insights into the behavior of mature organizations. In 2010, BTM released the Sustained Innovation Index,⁷ which showed that sustained innovation predicts greater capital efficiency, better margins, more revenue growth, and more contained volatility, as evidenced by the performance of Cisco, Lockheed Martin, and other heavy hitters.

Creating value for the long term is a holistic endeavor; it requires both analytical and creative talents. Sustained innovation, the index found, is composed of a range of behaviors. The study shows that the high-performance leaders, unlike their more one-dimensional peers, have built a culture that embraces both approaches to thinking, doing, and communicating. This holism finds its way not just into management but into the cultural character of the organization. What our research found is that enterprises with a focus on long-term value creation share three principles—together, they’re the glue that binds people together in productive collaboration.

To begin with, they have converged disciplines, meaning that ideas from one discipline aren’t isolated from another. Management isn’t far removed from technology. In the same way that rivers and streams converge to form a delta, the disciplines in a sustainably innovative organization form a single entity.

At a more micro level, this entails cross-boundary collaboration, meaning that no enterprise—and no person or element within the enterprise—operates in a vacuum. Every leader, manager, employee, and contractor has latent ideas for latent problems. As we will explore in depth, the more we can connect the people within an organization, the more we can increase our overall potential.

Finally, sustainably innovative organizations have sustainably innovative structures, for the structure of an organization shapes the products it provides. Like strategies, the structures can be deliberate or emergent; we’ll spend a lot of time appreciating these architectures in the middle section of the book. The bedrock beneath all these factors is an understanding of what you’re organizing for, which is largely a question of when.

As the Stanford Project for Emerging Companies and the story of the tortoise and the hare suggest, a lot of the success or, perhaps especially, failure that organizations bring upon themselves is due to the time in which they live. We’re prisoners of our temporal contexts: when people say that they’re going to live like there’s no tomorrow, they’re probably going to do something stupid. Chief executives, those monarchs of late capitalism, are no different. As Alfred Rappaport, the scholar and author of Saving Capitalism from Short-Termism, has argued, structuring executive incentives to the short term—think yearly bonuses—has a wrenching effect on the long-term health of an organization and an economy, as was made evident by the financial crisis of 2007–2009.⁸

This, too, helps make our path clear: if we want to do well in the long term, we need to be oriented toward the long term. But what does it mean to be working for the long term? What kind of people working in what kind of way can take the individualistic yet collaborative, experimental yet structured path of sustained innovation? This path, we’ve found, is a personal and collective journey requiring intra- and interpersonal skills that, with practice, we can begin to embody.

WHAT IS THE NATURE OF ENTREPRENEURSHIP?

Business literature is filled with definitions of entrepreneurship and leadership; the large number of definitions perhaps speaks to how many contexts in which these humble words find themselves. We often speak of entrepreneurship within a tech or start-up space, though surely the family running your neighborhood market is also entrepreneurial and the individuals in the corporate setting practicing intrapreneurship are entrepreneurial as well. But how is the energy these people bring from themselves and into the world different from that of a community organizer building neighborhood bonds or a volunteer catalyzing economic or healthcare growth abroad? How is this different from a hospital president making thorough revisions of patient care or an artist building relationships with her audience? Though these cases are in different industries with different ways of life and different prioritizations of values, the difference lies less in kind and more in context. If we are going to accommodate all these contexts, we have to define entrepreneurship broadly. Let us define it like this:

 

Entrepreneurship is taking ownership of one’s economic well-being.

 

In other words, entrepreneurship is about where we place the responsibility for our experience. It’s easy to place the responsibility for our economic well-being on outside forces, outsourcing our decision making to the down economy or stifling corporate culture. Although it’s hubris to think that one has complete control of one’s experience, it’s martyrdom to think that one has none. An entrepreneur, then, is someone deeply engaged in his experience of life—usually in an economic sense, though it applies to cases of the general good as well—and willing to do the daily work of transforming it. The entrepreneur is idealist and pragmatic, sensitive to the world she wishes to see, and conscious of the world as it is. The entrepreneur’s work, then, lies in connecting the two.

RECONSIDERING INNOVATION

Although they were formulated 70 years ago, Schumpeter’s ideas about innovation have only recently entered into popular conversation, most notably with Clayton Christensen’s The Innovator’s Dilemma, published in 1997. Christensen saw how organizations were fixated on the desires customers expressed rather than seeking out their unspoken, unmet, or future needs. When that need-meeting was coupled with the ability to produce goods at rapidly reduced costs, a company could become disrupted, the word that Christensen coined. See cell phones and landlines, Amazon and bookstores, Warby Parker and the eyewear industry, Blockbuster and Netflix. As companies become entrenched, they also become vulnerable, for they settle into inward-facing habits, making them vulnerable to younger organizations. To be an incumbent—or become an incumbent—is to invite disruption.⁹

To understand, we need to return to Schumpeter: it’s not that companies are competing with each other to just provide a lowest cost, but they could see their entire livelihoods sloughed into the dustbin of history. For a recent example, consider Nokia, which was the leader of the cell phone world since it existed—until smartphones, those handheld computing devices, made the comparatively dumb phone that preceded them intensely obsolete in the developed world. The riddle within that is why Nokia, which did an excellent job of making what had been excellent phones, ended up making irrelevant ones. Theirs is a cautionary tale, showing how finding efficiency in products is indeed important; however, we cannot allow worshipping at the altar of efficiency to blind us to the more mysterious, more existential endeavor of finding what could be the next step forward—or sideways—that will prevent us from perishing like so many feature phones.

We cannot shrink our way to success.

As we define it, innovation is not a single moment of catharsis, upheaval, or revamping. It is not a change in the form of a one-hit product; instead, it is a continuous process. If we are going to continually innovate, we need to set up a system that can continually discover. The popular imagination suggests a lonely innovator with a behemoth intellect receiving brief, isolated flashes of insight. This is a case of a lucky strike, to borrow from bowling; a chance encounter. But with proper structure and practice, we can systematize those chances, so that innovation becomes a product of gathering the best talent, working together in the best way, in an organizational structure most conducive to individual and collective flourishing. When the process is systematized, innovation becomes a regular rather than a heroic occurrence.

Those are the topics of Chapters 2 and 3. Before we get there, we must make a further inquiry into the nature of innovation.

TO CURE YOUR BLIND SPOTS, RECONSIDER EVERYTHING

The economic world is an interconnected cacophony. Schumpeter’s explosions can happen anywhere, and no matter where the node lies—person within organization, organization within country, country within world—the individual burst affects the whole network. Because that creative destruction can happen anywhere, we must look everywhere.

But we need not be violent. Like a child, we can ask the world how it got there.

We need to question and rethink each thing we do and every institution we have, whether social, governmental, business, educational, or healthcare. We must consistently ask about the fundamental aspects of our worldview: What is a business for? What is an organization for? Why do we use gross domestic product as a measure of a nation’s productivity? Why judge the strength of the economy solely on what consumers buy? Why are some companies one-hit wonders? How do others continue to find success? What constitutes innovation? What’s the nature of creativity? What are the causes of all this change?

Why all the reconsideration? Because companies ossify. Bureaucracy and inertia set in, creating “can I do that?” overhead every time someone wants to make a decision. A culture of “the way things are done here” can begin to set in, stymieing creative discussion and preventing connections with the ultimate arbiter of a company’s success: the customer. Even the most traditional industries need to take these deep looks into themselves.

THE MAYO CLINIC’S BOTTOM-UP INNOVATION

Since its foundation in 1889, the Mayo Clinic of Rochester, Minnesota, has been an innovator in healthcare. The center that W. W. Mayo built was one of the first to incorporate integrated medical care—what, in today’s parlance, was a massive desiloing—by putting specialists in the same building and allowing them to combine their perspectives for evaluations and coordinate their treatment.

In 2002, the clinic reached out to the innovation consultancy Ideo to reimagine patient services. The result was its SPARC (See-Plan-Act-Refine-Communicate) lab launched in 2004, which Fast Company writer Chuck Salter describes as a “clinical innovation lab that operates like a design shop.” There doctors, nurses, and others act like designers, focusing on the user experience and prototyping solutions to pain points. By taking this design thinking strategy, Mayo Clinic is investigating the basis of its industry: the way a patient experiences treatment. This is exactly the kind of bottom-up inquiry that an adaptive organization needs to continually make.¹⁰

ENABLING TECHNOLOGY: THE GAME CHANGER

To painter-illustrator-entrepreneur-activist Molly Crabapple, the whole starving artist thing is a “bulimic response to capitalism.” For her, if you want to work within the world of power—and the art world is certainly brokered by the powerful—you need to be fluent in the language of power, to have a “consciousness of power.” You need to be a seeker of opportunities and a builder of relationships so that as you grow, you can circumvent gatekeepers.¹¹

At the time of our interview, Crabapple is 29 years old. She is making six figures a year as a full-time artist, as she has for the last three years. This runs exactly opposite to the “lie” she says gets told to people about the ennobling effects of poverty, the aesthetic virtue found in just scraping by. To be an artist, her career shows, you have to also be an entrepreneur.

A consciousness of power was ground into her when she was young. Crabapple was born in Queens, New York, to a political science professor father and an illustrator mother. She remembers being seven years old and sitting with her dad at their kitchen table as he explained to her the nature of capital. She also remembers seeing her mom cultivate her talent and make sacrifices with an implicit trust that financial success would follow, though it never did. Crabapple, today, in her sweetly acerbic, raven-haired glory, is the fulfillment of both of their legacies: she is a skill-cultivating popular artist, as her mother would be, but that idealism is tempered by her father’s grounded pragmatism, a commitment to understanding the way the world really works and acting accordingly. “The creative disciplines are so fame-driven,” she says to us. “The reason that people get big book advances is not because they are shining literary lights; it’s because their book is going to sell and make money back for the publisher. It’s not even necessarily wrong—that’s just how it is.”

Her entrepreneurial ventures started with Dr. Sketchy’s Anti-Art School, a drawing club that quickly sprouted chapters in South America, Europe, and Australia. It didn’t make any money, she confides, but it did give her a global platform. How strange it is to be a midtwenties artist being flown to Finland to talk about sketchbooks, she recalls.

Accordingly, one might rightly consider Crabapple to be the model of the networked artist. She has a razor-sharp understanding of the way connections create value—a theme throughout this book—and has striven to constantly be growing them.

That knowledge of her “platform”—that is, the depth and breadth of her audience—is what’s catalyzed her ability to step around the usual gallery gatekeepers. The New York Times reported on a drawing and burlesque show she put on to reward her fans for getting her up to 4,000 Twitter followers; now she’s at more than 28,000.

That wealth of connections has allowed her to become a force in crowdsourcing: the Kickstarter campaign for her epic-scale painting show called “Shell Game,” her love letter to the cacophonous changes of 2011, earned $64,000 in funding, more than doubling her $30,000 goal. The campaign before that earned $25,000 in funding, eclipsing its $4,500 goal.

But her networked business aplomb doesn’t end there: she also monetizes via Etsy, the handmade goods network. At the time of our speaking, she had made $20,000 in the past year through print sales there. She’s constantly looking to find new ways to repurpose her work by selling prints, licensing reprints, or becoming part of iPhone covers.

In this way, Crabapple is a perfect example of an entrepreneur: a person who has taken full responsibility for her economic well-being, both in the way she wishes to live her life, and in the impact she wishes to have on the world. But to do that, she had to not take the received wisdom—that every good artist must be starving—and the established structure of the big galleries, who, she said “just want you to repeat the same piece of work that sold well last time until you die.” What enabled her independence was an insight into the way technology accelerates connections: the crowd that she built online has sourced her artistic projects. Her patron is the people. Her boss is the user.

Crabapple’s capitalizing on tech-enabled connections speaks to a larger trend, that of technological determinism. Historians speak of how civilizations are marked by their standards of technology; this is why we define our Ages by Stone, Bronze, or Information. The technology pushes the society forward; to an optimist, that’s progress. Although these advances were unpredictable beforehand, we tell ourselves we knew it all along afterward, reassuring ourselves with our narratives.

Thankfully, we’re getting better at constructing the narrative before it happens—we have more powerful abilities to simulate, predict, and identify these changes. The key, then, is to detect these enablers while they’re still embryonic—if not create them ourselves—and heed their call to action. To do this, we’ll need broad-based awareness—which we’ll define as mindfulness—of ourselves, our organizations, and the world. Cultivating that multilevel mindfulness will be a mission within this journey as well.

Although we are very clearly awash in enabling technologies at present, we must be vigilantly sensitive to enabling technologies as they appear, for their consequences are wide-reaching, from the collective level to the individual level. Recent history shows us why.

Although the photovoltaic cell was invented in the United States, China is the world’s largest producer, manufacturing over 23 percent of the global supply. While consuming unprecedented levels of fossil fuels, China is also poised to become a leader in sustainable power, as it plans to increase its use of solar power fivefold by 2020 (we will see if it holds to this initiative). The implications of becoming a clean-energy-producing superpower are unknown, though we trust they will be tremendous. But it is not only nations that can leverage enabling technologies; entrepreneurs of all kinds can do this as well.

After being rejected by a range of publishers, 29-year-old Amanda Hocking self-published her novels and promoted them with Facebook, Twitter, and blogs. After two years of diligent promotion from her living room, she earned $2 million. In January 2011 alone, she sold more than $400,000 worth of ebooks through Amazon and Barnes & Noble. Her success caught the eye of publishers, and soon St. Martin’s Press gave her a $2 million advance and a four-book contract. Although building her social media presence was hard work, it proved to be a transformative factor, allowing Hocking to become the writer she always wanted to be.

That same January 2011, a revolution was afoot in Cairo, enabled in a similar way. Social media allowed the rapid communication needed to bring 50,000 protesters together in the Egyptian capital’s Tahrir Square to demand that President Hosni Mubarak step down. Though the government disabled cell towers and attempted to block Twitter, by Friday, February 11, over a million people had gathered. Mubarak stepped down, and the Arab Spring bloomed.

Although dramatically different from each other, each case shows a shared thread of how technology changes the lives of individuals, organizations, and industries—with some falling away, regimes included. But where do these technologies spring from? As the case of Twitter shows, it’s a matter of satisfying ancient needs in a new way.

Twitter cofounder Jack Dorsey grew up in St. Louis listening to the emergency dispatch center: he noticed that people were always talking in short bursts of sound, microsized bits of speech. As he told Lara Logan of 60 Minutes, he noticed that people were “always talking about where they’re going, what they’re doing, and where they currently are.” That is where the idea for Twitter came from.¹² He recognized something that people wanted—the ability to communicate quickly with short bursts of speech—and was enabled by the rise of cell phones and text messages. Communication, we can agree, is one of the fundamental human wants—and Dorsey’s success is a case study in how entrepreneurs marry the timely and the timeless, the world as it is and the world they want to see. What entrepreneurs do, then, is recognize a vision for the future and connect it to the present. But this can only happen through mindfulness—the center of our next chapter.