The Human Genome Project was underway when I was a student at Harvard Medical School, and I remember wondering what would happen afterward, how would people access genetic information? I think just asking that question changed everything for me, because I started thinking about the world, and myself, a little bit differently. It evolved into a very clear focus: What exactly is going to happen to the field of genome analysis and how can I be a part of it?

As a young person going through the system, doing your homework and studying, you learn about all the great discoveries and movements in science and you think it's all so much bigger than you. But just daring to think you can actually change it was the first step for me. And so, once I was on that track, I focused on how to create a technology to access genetic information a lot faster. And that led to the creation of U.S. Genomics, which raised $120 million, has commercialized three products, and has partnerships with all sorts of companies and people.

It's leadership of ideas. I think that starts with staying true to a question that really means something to you and then being fearless in going about your process and what you're pursuing.

You have to follow your passion in life. At school, I graduated with a mechanical engineering degree from Yale. My dad is literally a famous rocket scientist so—as any good Chinese boy would—I figured I should be a doctor, lawyer, or engineer, and I took the engineer route. In my junior year, I told my parents that I would finish my degree, but I really didn't want to be an engineer. I wanted to be a chef. I wasn't sure how they'd react to that. Well, my mom gave me a big hug. She told me how lucky I am that I know what I want to do at such a young age. She said, “Give it your all. We support you 100%.” My dad accepted it too, telling me, very bluntly, that I was not going to be a very good engineer anyway! He was right, and I know that because I didn't love it. If you don't love what you do, if you're not passionate about it, you will never be good. You'll just go through the motions. And I think that's true in any industry. If you love what you do, things just come so much more easily to you.

Benjamin Franklin was so right when he said that human beings can be categorized into three types. First are those who are immovable. We all know them. Second are those who are movable, and we know them as well. Third, and this is my favorite category, are those who just move. And I think that not only do they just move, but they also keep moving, and they move others along with them. A leader not only does the work, but also inspires others to do the work for a great cause. A great leader moves those who are movable, and inspires those who are immovable.

You can't guarantee innovation, but you can remove the constraints and create the conditions for innovation. People sometimes think that they can get innovation by creating an innovation program and giving speeches about innovation and putting a suggestion box in the corner. In my experience, that doesn't work and actually creates cynicism. Innovation is not something that happens because you tell people to go innovate. It's something that happens when you create an environment that encourages it, when you reinforce that with the right economic and social signals, when you have the right people in place, and when those people have a sense of shared purpose and shared adventure.

We created a command in the Pentagon called the Joint Improvised Explosive Device Defeat Organization (JIEDDO) because we were losing so many lives to IEDs, improvised explosive devices. Congress quickly funded roughly a billion dollars to this office whose single focus was to figure out a way to get ahead of the enemies with respect to IEDs. And this focus on saving lives immediately broke down a lot of barriers. This guy could do things that no one else could do. He was able to get directly connected to those in Iraq and Afghanistan who were in the fight. He created a feedback mechanism for resolution of technical difficulties, which normally takes weeks or months, but he could do it in a matter of hours. He created an analytics group that allowed much more rapid analysis in terms of what the problem was and what a possible solution was. Even though they were located in Washington, it was as if they were fighting on the ground. They had a huge impact in terms of getting ahead of the IED problem. It was a lot of money and it was a lot of leadership cover—and we were losing a lot of lives. So there was a great sense of urgency. When you're losing lives, there is nothing more serious.

Leaders have to inspire their teams. If you can outline something that seems compelling enough, exciting enough, and doable with significant benefits, then they are all ready to buy in. They know that if the company does well, so do they. That's clearly what happened at Symantec, when we made the declaration that we were going to be the leader in securing the web experience. Everyone in the world recognized that was a big, big issue and someone had to step up.

San Jose is in Silicon Valley, the capital of technology innovation. Yet I found out that half of the students in San Jose didn't have computer access to the Internet. I thought, if that's what it's like here, imagine what it's like in towns and cities that aren't high-tech. Imagine what it's like in countries and villages that aren't even developed! So this is my passion, to make sure that every student in every school across the globe has their own connection to the Internet and can learn to their fullest capacity.

The best part of being a chef is creating something new and knowing that because of that new dish or that new service, we can actually make people happy. And that is what drives me.

Your goal should not be that you want to be successful. Success is not a goal. Your goal should be how can you serve, how can you make the biggest impact with your skill set, do the most for that business to create something and help others. Every night I go home and I know we've pleased a lot of people. People leave happy. They may come in grumpy, but they leave full and satisfied. They may come in sad but they leave happy. You can really affect someone in a two-hour timeframe. And it's not rocket science! It's not like what I studied in college! It really is very basic: creative food that's a good value, excellent service, and respect.

Those values that our people shaped have held up remarkably well as a distillation of what it means to be “an IBMer.” We still have a long way to go to make them real in everything we do, in our management systems and our behavior. But I think it's safe to say, after nearly a decade, that we laid the right foundation. And I am convinced that the transformation we have carried out since then was only possible because we first undertook this deeper dive of self-discovery—because we not only made “trust and personal responsibility” one of our values, but we demonstrated it in how we created them.

When someone says “people are our most important asset,” I say, “Tell me how you demonstrate it. And take money out of the equation. Don't tell me how much you pay somebody. Tell me what you do to show them.” I believe that if people know that you genuinely respect and care about them, that you have their interests at heart, they will follow you anywhere. What I think all great leaders have in common, across any culture, across any industry, is that people come through for them. Not because they are afraid. Not because they are intimidated. They just don't want to let their leader down. If your people feel appreciated and respected, they are not going to leave at five o'clock figuring somebody else has the problem. They are going to help you innovate to solve it.

Leadership requires soft skills because the way you treat your people is exactly how they are going to treat your customers. Never forget that, because if you treat your people with arrogance or attitude, they are going to treat your customers like that. You have to treat everyone with respect. As my dad says all the time, the people who work for you and look up you are the ones who will help you rise to the top. They are also the ones that can protect you from falling to the bottom if something goes wrong. If you don't respect them, they won't respect you. And if people don't respect you, then they don't want to join your journey. My dad makes people feel like they're in charge. I mean, he's always been the boss, but to his subordinates, they're the ones making the decision. And I learned from that.

Many times, leaders offer inspiration most when it is needed least, and offer it least when it is needed most. When people call after you've had a big win, by the fourth or fifth call, you are not inspired. I've called salespeople when they miss their goals and said “Hey, I understand you had a tough year, don't worry about it. We have your back. You have been great for many years, don't look backward, look forward, we have your back.” I tell people, when you have someone's back, don't keep it a secret. Things like that make people feel like they want to go to work. They work hard and when they get that call, that's the call they never forget. They all forget the fifteenth call after the big win, but they never forget who was with them when it wasn't so obvious. We want our people to know that we understand their challenges. We know we're asking for something difficult. Going at the rate we go is hard, we get that. We make sure they know we appreciate it, we understand the struggle.

Generally, there is a bigotry of low expectations for inner-city residents. However, we have high expectations, and we combine them with a lot of support. We don't see those as being mutually exclusive. You support the heck out of someone, but you never lower the bar. In a lot of environments, there's a willingness to accept less than the best, or to lower expectations—somehow born out of a stereotype that our young people aren't capable, smart, or able to deliver at very high levels. We fundamentally know that's not true, so we challenge people significantly on a daily basis. It's possible to be deeply supportive and still have a system in place that holds people accountable. And our students want that. Many young people say—no one ever thought enough of me to hold me accountable. No one ever thought enough of me to extract the best from me. We do. I don't think the motivations of human beings differ based on race or economic status or ZIP code.

One attribute of the Silicon Valley culture that's really important is that if you are part of a start-up and that start-up fails, it doesn't mean that people won't hire you. In fact, they are very apt to hire you. Things fail for lots of reasons. Just because it fails doesn't mean it was a bad idea or the people in it were bad. Maybe a few of the ideas were bad, maybe a few of the people were even bad, but by and large, failure is a kind of tuition. It's a very expensive tuition, and frankly, you would rather have somebody learn about what doesn't work on someone else's dollar. So it's been the culture in Silicon Valley for the last 30 years, that hey, if your start-up doesn't work out, that's okay. Silicon Valley is very forgiving. If it wasn't that forgiving, then it would be very hard to maintain the pace of innovation. When I travel in Europe or in Asia, people there will sometimes say, “How come we don't have a Silicon Valley?” And I ask, “If one of your startups raised $50 million, hired a whole pile of people, went high flying and then went bankrupt, would you hire those people?” And many of them say, “Well no, of course not.” So then I say, “That's why you don't have a Silicon Valley!” Because if you create a culture where everyone has to play it safe at all times, they won't take the risks necessary to do something new. A lot of companies want to be innovative, but then they don't do anything to create the right incentives for their employees to take risks. I'm not saying that failure is the goal, but failure has to be okay.

Let's say you have a .330 batting average. Well, that means that 70 percent of the time, you strike out. How terrible! But you would actually be one of the best hitters in baseball! So the coach doesn't say, “You failure! You should be hitting 100 percent of the balls!” No, they tell you, “That's great—you have a .330 batting average!” Well, innovation is even riskier than hitting in baseball. So you need a culture where it's okay for people to strike out sometimes. If you expect innovation to be really easy and always positive and always wonderful, then you have the wrong expectation. And you're ultimately not going to succeed in it, because as soon as the going gets tough, you're going to get timid.

Most big companies—most organizations—are about avoiding failure. Just think of the word management itself. A company that's well managed has very predictable results; they control the environment and avoid surprises, because typically surprises are bad. So management is about not having unpredictable outcomes, while innovation is an unpredictable outcome! I think this mind-set is why many organizations unintentionally define success as a lack of failure. I don't. I think success is doing something better than anybody else has ever seen or reported it being done. And if it's that good and that valuable, it's called an innovation.

It would be irresponsible to bet the farm and have people destroyed or companies destroyed. But taking small risks, knowing that you are probably going to fail a bunch of times, but that you can afford the emotional and financial risk of doing so, is one way that a whole organization can end up being more innovative than other organizations who are steeped in the belief that failure is bad. It's possible to create an environment that encourages people to try to innovate by giving them some sense that failure—when done responsibly—we can tolerate it. It's part of life and failure can be of a project and not of the person. And as long as you can limit the downside of the failure in terms of its impact on an organization and on your resources, it's okay.

What I do at DEKA is let people know that it's okay to apply different technologies or different thoughts to conventional problems and see whether they lead to unconventional but better solutions to those problems. Most of the time, they don't. But people can work on a project and have a result be a failure without the person being a failure. And people see an environment that doesn't punish individual failures, as long you learn from it and move on. We actually celebrate our failures; we make fun of them in a positive way. We call it frog-kissing. You know, you can kiss a lot of frogs and get nothing but warts, but every once in a while, you kiss a frog and it becomes a prince or a princess. At DEKA, particularly for people that have come here with some experience in big companies, it takes them a little while to recognize what's going on. When I ask them to do very difficult things, I perfectly understand they are going to try and they are going to fail. We are not going to punish that failure; instead, we are going to recognize the time and the effort and the energy expended as well as the disappointments. We support people who try things, and we won't punish them. After a while, people start getting excited about doing things in ways that have never been done before. And, as they do, they keep finding all the ugly reasons it wasn't done that way—it doesn't work, it was too expensive, too this, too that. … But every once in a while the intersection of new good ideas and new and better technologies allows somebody to walk into my office and say: “Hey, look at this, it's smaller, it's lighter, it's faster, it's cheaper, it's more reliable. It's a better solution to an old problem.” Then we celebrate it and, often, it creates enough value that we now have more resources to try other innovations. It can be expensive up front, but if you believe in it, and you have a little bit of courage and you are willing to fail, it works.

Companies can be innovation-crushing machines. They group-think, and they try to eliminate risk, which basically eliminates innovation. When we crafted our value statement, we said we will take risks. I often tell people, “If you don't take a risk, you just took a risk. If you don't make a decision, then you just made a decision. There is no safety in not doing something. There is no safety in just thinking if I sit here, I won't get hurt. Innovation needs a culture that says that if we are going to innovate, we are going to risk, and that means that some things are going to work and some aren't. So let's go. …

Our business is heavily regulated, and rightfully so, given the amount of assets we hold and the systemic risk for the markets as a whole. Innovation in this environment means more costs and more controls. You can't experiment in ways that lead to headlines in the papers and huge losses for your shareholders. But regulation doesn't mean sacrificing innovative capability. It's not an excuse or a barrier. In fact, regulation is an advantage, if you see it in terms of specialization and service. So we have a huge opportunity to be innovative in our markets. For example, State Street created the first ETF. I remember sitting at the management committee meetings when we were evaluating the concept along with a few other product development opportunities. The asset management team had envisioned a product similar to our passive product, but with real-time valuation and real-time market processing, and it would trade like a stock rather than a fund. The good news is that we funded the ETF effort. The bad news, in hindsight, is that we didn't bet the ranch on it! We made a few other bets at the time too. But, when you're primarily selling risk products, you have to think about protecting the downside.

From a leader's standpoint, I think you have to do a pretty thorough and honest self-evaluation and figure out if you are capable of leading innovatively. If you are not, then I think you need to hire individuals who are, and you need to delegate to them, empower them, and support them. They need to be properly incentivized individually for outcomes, and the organization needs to be properly incentivized if you are going to produce innovative ideas.

When I started my first company, I had never managed anyone ever in my life. Even running just a small staff of people quickly turned into a disaster. It's one thing to be book smart and get A's on your tests, but having soft skills and dealing well with people was a completely different skill set that I'd never even thought about. So I had a lot to learn in that regard.

The lowest point came when half my company quit on me. I was maybe two years into it, and I clearly didn't know what I was doing. I think we had maybe ten or twenty people at that point and there were multiple things going wrong. I hadn't budgeted correctly, and we were running out of money. Communication with my staff was incredibly poor because, at that point, I thought it was all about me, not my team members. Basically all these things came to a disastrous outcome when half the company quit, and I had rebuild it.

So I went into a period of self-reflection, and I had some external consultants come in and help me out. It took me about a year and a half before I saw the light, and then things became much more effective. The difference was like night and day.

Part of it is learning to be responsible, learning how to take care of your team members, and trusting that your team is the most valuable thing that you have. Another part is being a good communicator, so people don't have to guess what you are thinking. You have to articulate exactly where things are going—not just the big vision, but also the concrete little stuff that gets you there. Because when you do, you can actually see your powers amplified. In addition to having ideas and technological skills and know how, now you've also got all these amazing people with you on your team helping create something that's pretty incredible.

Level One: Limits Ingenuity

At Level One we are limiting ingenuity, often acting as the “brain” and treating others as arms and legs that are there strictly to execute instructions. We are incapable of inspiring others with a clear vision or allowing others to feel a sense of ownership. Leaders at this level are unable to gain the trust and respect of others. Solutions are implemented in a way that generates a “compliance mentality” and fails to bring about desired change. We are unaware of the ways in which the business's existing incentives encourage people to remain tied to the status quo.

Level Two: Leverages Ingenuity

At Level Two we are doing much better, leveraging ingenuity, communicating a clear and achievable short-term vision, and creating enthusiasm, ownership, and accountability. We are able to gain the trust and respect of others through demonstrated integrity. We involve others in designing and implementing solutions, increasing buy-in and reducing resistance. There is a focus on enhancing or supplementing incentives (e.g., compensation) to support accountability, initiative, and teamwork and to minimize penalties for limited risk-taking and failure.

Level Three: Cultivates Ingenuity

At Level Three we are at the top of our game, cultivating ingenuity, upholding a compelling future vision and a strong sense of shared purpose. We always inspire others to do and be their best. We align incentives, social cues, and processes to encourage and manage creativity and change. Emotionally intelligent and highly regarded, this leader challenges and supports others in achieving beyond their own expectations, and actively supports processes that enable experimentation, constructive failure, and learning.

In many organizations, the passion and ingenuity of employees go untapped. Leaders at every level have the opportunity to harness incredibly abundant yet often underutilized resources. Such efforts will not be wasted. As Admiral Mullen told me, “People get a tremendous amount of personal satisfaction with a job well done, with the opportunity to create, to give back, to make a difference. You need to cultivate that. If innovative people do not have a leader to connect to, they are going to go somewhere else.”

Individual

Leaders exist at every level of the organization, not just in the management and executive ranks. John Quincy Adams, the sixth president of the United States, said it best: “If your actions inspire others to dream more, learn more, do more, and become more, you are a leader.” Leaders articulate a clear vision and invite others to share their passion. They set high expectations and support others in achieving them. Leaders build trust, respect, and integrity by demonstrating it. They work hard to develop emotional intelligence and sound judgment, learning from every experience and emulating the leaders they most admire.

Team and Organization

Innovative cultures encourage experimentation and learning. They do that by ensuring that their expectations, processes, and incentives are all closely aligned. Clear guidelines for acceptable risks are communicated to employees, and people who do the right thing the right way are not punished when they don't get the “right” results. In fact, they're rewarded for their willingness to advance progress. Processes exist to ensure that the organization as a whole is able to learn and benefit from their experience.