When people ask me to describe the first step on the path to innovation, I say, “Listen! It's all about the Art of Listening. It's listening to learn!”

Most of us assume that we know how to listen, whether it is music playing, birds singing, or people talking, but in my view, all we're really doing is just hearing. Listening is something much deeper.

Several years ago, I saw a PBS public service announcement that opened with a composer sitting alone at his piano. We could see his frustration and despair as he struggled, without success, to craft his melody. Suddenly, his efforts were interrupted by the sound of flapping wings outside of his open window. He turned to watch as a flock of birds arranged themselves on telephone lines, as if they were notes on a bar of music. He tapped out the notes on his piano that the birds had formed and listened to the melody. Quickly, he turned that melody into an elegant symphony, and the message “be more inspired” appeared on the TV screen. To me, this is the essence of listening and the heart of innovation. When we listen to the world around us, we will often find inspiration—or even just important information—from the most unexpected sources.

Since the time we were children, our parents and our schools helped us to become better readers and better writers and better speakers. But if we think about it, how often did we have lessons in listening? The education system doesn't even recognize listening as a discipline. That's too bad, because I believe it is critical to so many things we try to accomplish in life, including innovation.

As we carry on in our careers and social lives, most of us do become accomplished hearers—instead of listening to exactly what someone else is trying to tell us, we're often thinking about what we're going to say in response. Certainly that can serve us well, but hearing and listening are as different as noise and music. If innovation is to happen in our businesses, we must become—and our team members must become—an organization of listeners.

I began learning about listening at a very young age. When I was growing up in China, parents taught their children that when adults are talking they should stay quiet, listen, and learn.

This was my father's practice as well. He always let his guests do all the talking, and he was a perfect listener remembering everything they said. I can still picture him sitting in his chair, with a slowly burning cigarette resting between his lips, and one eye slightly closed to avoid the smoke, hardly ever saying a word. Occasionally, he would ask a question.

Interestingly, my parents always put these two words together: listen and learn. They believed the best way to learn is by listening, and the Chinese character for “listen” illustrates the proper technique of listening.

Patience, Humility, Respect

It's hard to listen. Listening requires patience, humility, and respect for others.

Most of us in the business world are under a great deal of pressure. We are asked, ask ourselves, and ask others to do a great deal in very little time. As a result, we often cut others short either by ending the conversation or by shutting our ears before we fully understand what they're trying to tell us. Listening wholeheartedly requires patience.

Humility, and in particular acknowledging to ourselves that we know very little—and that often we don't even know what we don't know—also makes better listeners of us. By acknowledging the limits of our personal knowledge, we admit that we have much to learn, and so better prepare ourselves to listen to those who might teach us something.

Listening also requires respect. In fact, there is no better way to demonstrate respect for others than by paying close attention to what they have to say. By doing so, we highlight every speaker's importance and our own opportunity in being able to benefit from their knowledge and wisdom.

Successful innovators need to be in constant communication with a broad group of people from diverse backgrounds, industries, geography, and generations, including our customers, employees, senior management, colleagues, partners, and vendors—all the key stakeholders. What we learn from committed stakeholders allows us to be more responsive to changing business requirements, client expectations, and advances in technology—all within the context of our organization's unique objectives and constraints. Also, listening and learning about the market and our competitors helps us better position our company for innovation and success. It also allows us to identify and resolve potential issues early in the process.

As my father always said, “You can't learn while you're talking.” (My mother would always nod and smile, and say, “That's right. Really smart people don't talk very much.”)

We also need to listen to the younger generations. Many of us grew up in a time when we accumulated useful knowledge and informed perspective only as we aged. It is still true that many important lessons are leaned only through time and experience. However, there are so many new phenomena and experiences—social media is a great example—that only the young people among us have grown up with and truly know and understand. Different age groups can bring very different perspectives, each with unique values.

My teams always leveraged intern programs and consistently benefited from the contributions and perspectives of the young students who worked with us. For example, Anna, a recent intern, was an expert in social media. She reverse-mentored many of us and played a key role in the development and rollout of our corporate Innovation Community, one of State Street's most popular collaboration sites, with thousands of followers from all over the globe.

Listen: Levels of Effectiveness

Listening occurs at three basic levels. The more effectively we listen, the more we learn and the more productive we can be as we set out to accomplish new goals.

Preparing Ourselves to Listen

To listen wisely, we must have an open mind and no agenda. We should prepare ourselves to hear something new. In fact, we should be prepared to hear anything that is said to us, and, at least for the moment, reject nothing.

That means having conversations to which we bring no preconceptions that could distort our understanding. It means listening to what others are saying, especially when what they are saying is not what we expected to hear, or what we wanted to hear. And it also means listening to what people are not saying.

We must also momentarily suspend disbelief and come to the conversation willing to listen to what others have to say—without judging the rightness or wrongness of it until they have had a chance to fully explain themselves. The psychologist George Miller puts it this way: “In order to understand what another person is saying, you must assume that it is true and try to find out what it could be true of.” We can also think of it as an attempt to enter the speaker's reality as fully as possible, but without closing the door on your own.

Hard as it may be for some of us, we should be prepared to hear our ideas challenged if we make it clear from the start that we want to hear the truth.

Let's approach it another way: Listening is about creating an atmosphere of trust. That can be rare and difficult to establish in organizations. In many corporate cultures, the bearers of bad or controversial news is treated as if they were to blame. It is common to hear managers say, “Don't come to me with a problem, come to me with a solution.” After hearing that, how many employees do you think will bring up issues that need to be addressed? Too often it can lead people to hide problems they can't solve on their own, instead of seeking help. It's important that team members have the freedom to find solutions without having to bring the problems to management first. However, they must also feel comfortable escalating problems that they don't know how to solve. Leaders who keep listening will know the difference, offering support where it's needed, and inspiring others to act without fear.

Sam Palmisano, the highly regarded and recently retired chairman of IBM, knows the importance of listening. Sam had been at IBM for a long time, joining the company in 1973. After a successful start in sales, he caught the attention of upper level management, and he rose rapidly through the company's ranks. He became president of the company in 2000, CEO in 2002, and chairman in 2003. You would think that an accomplished executive who had been around IBM for so many years would know everything there was to know about the company. Sam didn't think so. As he told me,

As I will discuss further in the next chapter, I was fortunate enough to have had Sam Palmisano as a mentor while he was president of our business unit at IBM.

How I Go about Listening

When I arrived at State Street in 2001, I made the usual rounds, introducing myself to the company's upper level management and the heads of all the major business units. I wanted to listen to what each of them had to say about service quality. I also wanted to listen to any other issues that touched on technology infrastructure. Finally, I wanted to listen to their business challenges. I came out of these meetings with a strong sense of the needs and issues that these executives wanted to see addressed. One, in particular, rose to the very top of my to-do list. It was a vendor pricing issue mentioned by Ron Logue, who then headed up our biggest business unit. I had been quite surprised when he brought it up, since IT vendor issues don't typically require the attention of the company's business executives. I could tell from the tone of Ron's voice and the expression on his face, though, that this bothered him greatly. I knew that if I could solve this problem for him, I would gain his trust and confidence in my ability to solve the rest as well.

First, I did my homework, collecting data and facts. I spoke to everyone who had anything to do with this contract and vendor. I got copies of the old contract and the new one, and sat down to read each one in detail. I could hardly believe it when I saw that the old contract had terms and conditions that gave the vendor clear rights to increase the price up to double the amount of the current payment. Evidently, the details of the pricing agreement had either been missed or lost in the five years since the contract was signed. The vendor had done nothing wrong—other than not “listening” well to an unhappy client. I knew their CEO and sent him a note. I explained that I had just joined State Street and I was looking forward to working with him again. He left me a voice mail saying, “Madge, congratulations! If there is anything I can do to help you to be successful there, please let me know!”

I assembled a team of IT, procurement, and finance people to start working on the new contract. Our team met with the vendor team many times to try to come to a mutual understanding. Over the years, however, a great deal of hostility had been built up, and the team made little progress at first. I called their CEO to take him up on his offer and to let him know that I could help him be successful at State Street, too. Together, in partnership, we found a much more reasonable starting point. Seeing the results of our collaboration energized the team. They worked, in partnership, to improve the contract terms even more. However, the business executives, still feeling stung by the unexpected increase, remained reluctant to enter into a new commitment with a vendor they had come to distrust. I called their CEO once more. After a long talk, he agreed to a total reduction of more than 70 percent from their original proposal. This single to-do item, which resulted in annual budgeted expense savings of millions of dollars, let Ron Logue know that I had listened to him. In addition, it reestablished a sense of partnership with an important strategic vendor whose product was an essential component of State Street's application platform at that time.

What does this have to do with innovation? Everything! Great ideas cannot succeed on merit alone. They can succeed only when they are built upon a strong foundation. As innovators, listening allows us to understand and align our efforts to the objectives of our business leaders. It helps us uncover the root causes of issues and envision feasible solutions. And it forms the basis of our partnership with the people and companies on whom our success will depend.

Here's an example of listening as practiced by Tom Mendoza, vice chairman of NetApp, the global data storage company. He was able to nurture enough trust among employees that they were willing to tell him the truth—some bad news about how hard it was to make improvements in the company's processes.

“Listening” to the Facts

As we listen to others, we should keep an eye on the facts as well—facts and data as well as analytics. Listening to the facts can help us get to the root cause of the issues raised and the requests made by key stakeholders. In the same way the data might provide us additional information beyond what we heard, it can also reveal issues buried long ago by the need to develop simple procedures to get through the day or put out the fire. Finally, if most of those to whom we listen are reluctant to give us bad news—in spite of our efforts to develop trust—the data can fill that void. And while the conversations will most likely give a faithful sketch of the situation, hard data and firsthand experience will fill in the big picture. For example, when I ran IT infrastructure, I would walk the floors of the computer operations center whenever I could. I especially liked to show up when the shifts were changing, because that way I could listen to the details of what had happened on the first shift and to what the next shift planned to do about it. I also asked to receive every “incident alert” that went out, which was a unique request from a senior executive, since the normal practice is that only critical alerts are automatically sent to senior executives.

We can think of listening to people and listening to the data as two sides of the same coin. Flipping the coin again and again will help us understand the deeper realities and root causes of what we hear.

The following story by Deborah Ancona, professor of management and director of the MIT Leadership Center, perfectly illustrates the point that you have to both listen to people and look at the facts to arrive at a clear understanding. And you have to suspend your assumptions while looking at the facts, in the same way that you have to suspend your assumptions while listening to people.

What Deborah is discussing is the concept of disconfirming data: information that is inconsistent with our beliefs and expectations. Modern psychology has actually coined the term confirmation bias to describe the human tendency to focus on information that confirms what we already believe and to simply ignore information, or disconfirming data, that does not. Great listeners and curious minds share a keen interest in disconfirming data, knowing that it often signals an opportunity to learn something new, or to understand a very different perspective on what we already believe to be true.

Listening to What Is Not Being Said

Another important characteristic of great listeners is that they go beyond the words. They watch body language, they notice patterns, they make a concerted effort to understand the reasoning and thinking behind the words they are hearing. John Swainson, president of Dell Software and former CEO of CA Technologies, told me how careful listening combined with additional facts and knowledge can bring us to a totally new understanding. In addition to his other achievements, John was at one time general manager of the Application Integration Middleware Division, a business he founded for IBM. In this example, he describes the origin of IBM's Websphere product, a software solution that revolutionized and simplified web application development.

The example that John discusses here very effectively demonstrates the essential role that listening plays in successful innovation and the multiple steps that it requires. First, John listened to his customers in keeping with the principle of “assuming that what we're hearing is true and trying to find out what it could be true of.” This led him to go beyond simply listening to what they were asking for, so that he could also understand why they were asking. That helped him gain a deeper understanding of the essential problem that they were facing. Next, John looked at the facts—the number of customers asking for similar assistance. And then, he combined what he heard with what he knew, which led to the development of an entirely new solution.

In a similar vein, here is Nathan Myhrvold, who we heard from in the opening pages of the book. Like John Swainson, he discusses the need to “step outside and beyond the immediate” to understand the larger issues—and larger opportunities—involved.

I met Dr. Tenley Albright, now Director of the MIT Collaborative Initiatives, when she served on State Street's Board of Directors. Tenley has a fascinating personal history. She spent most of her career as a surgeon. Before attending Harvard Medical School, however, she earned worldwide recognition as the first female U.S. figure skater to win both a world championship and an Olympic gold medal. She tells a wonderful story about listening beyond the words as she practiced for one of her world-class performances:

As Tenley's wonderful story demonstrates, good listening doesn't require us to discard our intuition or accept another's viewpoint without question. However, it does require that we momentarily set our beliefs and convictions aside, in order to understand someone else's.

Tenley has another story that can teach us something more about listening to what is not being said. It is listening for, and questioning, underlying assumptions. Tenley was a pre-med student at Radcliffe at the height of her competitive skating career. After becoming the first American female skater to win Olympic gold, she was ready to move on to her next challenge, becoming a surgeon. However, she still had a full year of undergraduate study to go. Or so it seemed.

Before we leave this chapter on listening, I'd like to return to the source of my ideas on the subject—my family in China—and tell a story of a miraculous episode of listening that changed my life:

After finishing college, my father went out to sea, rising through the ranks in oceanic shipping, and becoming a captain. For many years, he could be found at the helm of large cargo ships plying the Pacific Rim. (He later became the master of other captains, and he spent the peak of his career managing both business and staff for one of the largest shipping companies in Hong Kong.)

For several years, my parents traveled between Shanghai and Hong Kong, still a colony of Great Britain. They finally settled down in Hong Kong with my brother, while my three sisters and I remained in Shanghai with some domestic help and our Grandma, who was a physician practicing Chinese medicine.

One spring, I wrote a very important letter to our parents. I suggested that the four of us—Margo, Marjorie, Marsha, and me—leave Shanghai and join my parents for a summer vacation. That spring, Mother was accompanying Father on his freighter sailing in the Indian Ocean. Normally, we always sent letters addressed to Mother. This time, however—most significantly—I addressed my letter to Father. I asked that we be allowed to visit them during our summer vacation and see some of the lands they frequented in those days—India, Hong Kong, Singapore, Burma (Myanmar), Ceylon (Sri Lanka), and Japan.

Father listened and understood. By addressing the letter directly to him, rather than to Mother, he thought I was requesting his personal assistance. As my younger brother, Michael, recalled to me later, as soon as Mother read my letter to Father, he exclaimed: “Ayah! Nai-Ying, the girls want to get out!”

Father immediately wrote a letter inviting us to visit them on his ship, and my sisters and I took his letter to our local police station and applied for a “temporary” exit permit allowing us to spend a summer vacation with our parents in Hong Kong.

Our request was approved, and we were authorized to visit Hong Kong for the summer. We packed a single suitcase with enough clothing for all of us, and left behind everything else we owned, including Mother's jewelry, calligraphy, paintings, everything.

We embarked on our summer vacation and settled down in Hong Kong with the rest of the family. Farther had understood from my letter that it was time for us to leave Shanghai for good and rejoin the family. This was a desire on my part that I really didn't understand myself—really an unconscious desire at that time. But Father had listened beyond the words, and he understood!

Listen—Concrete Steps for Putting This Discipline into Action

How then, can we create an organization that truly listens—that, in effect, puts its ear to the ground to discern what's really going on, as the company in Deborah Ancona's story eventually learned to do?