Creative Strategy: A Handbook for Innovation

Introduction

This book is a practical guide to a big idea about innovation. It’s an idea with roots in modern neuroscience, classical military strategy, and Asian philosophy, and it’s played a part in countless cases of creative innovation in business and other fields. Over the past decade, I’ve explained the idea in a series of books and articles, and I’ve taught the idea to thousands of graduate students and executives in courses at Columbia Business School and in sessions at companies around the world. This book offers a method to apply the idea, in a form that any innovator can learn and use, without any advanced training in business or economics or any other technical field. All you need is a passion for ideas and a desire to put them into action for personal and professional fulfillment. You can use this method as an individual, in a team, or throughout your organization.

The idea is creative strategy. It solves the problem of innovation, not just for designing new products but for coming up with creative ideas for strategy at any level: the overall company, a division, a team, or just yourself. It applies to businesses, government agencies, nonprofits, and your own career and personal development. In all kinds of strategy, you always need a creative idea to some degree because the world around you is always changing, so the future is never exactly the same as the past. Your strategy must change to keep up with the times. But how should it change, exactly?

There are two kinds of traditional methods that claim to yield creative ideas for strategy: methods of creativity and methods of strategy. You will see that neither set of traditional methods actually solves the problem. Methods of strategy show you how to analyze your strategic situation, but that’s where they stop. They don’t give you the next step, how to get a creative idea for what to do. Methods of creativity show you how to come up with lots of creative ideas, but they don’t connect those ideas to your strategy. So you end up doing lots of strategic analysis first, and then go into a room to brainstorm creative ideas. There is no connection between the two methods.

This common sequence—formal analysis, then creative brainstorming—actually comes from an old theory of how the brain works. You’ve probably heard this: the left side of the brain is analytical, and the right side is creative. So first you do your analysis (left side) and then let your creativity (right side) take over. Unfortunately, this is not how the brain really works. In the past ten years, neuroscience has overturned that old model of the brain. We now know that analysis and creativity are not two different functions on two different sides of the brain. In the new model—called learning-and-memory—analysis and creativity work together in all modes of thought. You cannot have an idea without both.

The new science of learning-and-memory reveals at last how creative ideas form in the mind. When you do something yourself or learn what someone else did, those details go into your memory. When you face a new situation, your brain breaks down the problem into pieces and then searches through your brain for memories that fit each piece. It then makes a new combination from those pieces of memory. The combination is new, but the elements are not. These three steps—break it down, search, combine—are very different from the two conventional steps of analyze and brainstorm. Creative strategy puts the three steps of learning-and-memory for new situations into a practical method that fits how the human brain actually works.

Part I of this book offers a step-by-step guide to the practice of creative strategy. It begins with a picture of how the brain puts creative ideas together, and then shows how that translates into a formal method for innovation. As you proceed through Part I, you will see that each creative strategy step differs in key ways from traditional methods of strategy, creativity, and innovation. At various points I pause to explain the differences to keep the distinctions clear.

Part II goes into these traditional methods in greater depth to help you alter or depart from them to make room for creative strategy. For example, perhaps you currently use Porter’s Five Forces or Blue Ocean Strategy, Six Thinking Hats, the Balanced Scorecard, Design Thinking, Design for Six Sigma, brainstorming sessions of various kinds, or the like. Your aim is to make them work with creative strategy, not against it, and Part II shows you how.

Part III offers miscellaneous materials that provide more background for you to refer to according to your interest or need. It includes a brief summary of the creative strategy method and a review of key sources that led me to the main ideas of this book. As it turns out, I used creative strategy to create creative strategy, and this section shows where the ideas came from that made up the new combination.

As you go through this guide, try to look at creative strategy with a beginner’s mind, as they say in Zen—itself a key source for creative strategy. Try to clear your mind of other methods and allow it space to consider this new idea. At the end, when you’ve gone through it all, you can decide whether to toss the book away or try to apply its methods, at least in part. Of course I hope, if you’ve read this far, you’re willing to give it a chance.

I

Creative Strategy from the Inside

Part I of this book immerses you in the method of creative strategy. It shows step-by-step how to use creative strategy for innovation problems of various kinds. By the end you become an insider—you know how it works, what makes it tick, and all the moving parts.

Each step in creative strategy has its own complexity and calls for different skills to master. Here I present a much simplified version, which will fit no situation exactly. But it does fit all kinds of situations to some degree. Whenever you face a complex problem that you don’t see a way to solve, you need an innovation. But you might not realize that’s what you need. You were hired because you know the answers, and it’s hard to admit that you don’t, that instead you need something new.

Normal planning methods often hide the need for innovation. You lay out your goals and initiatives and timetables for marketing, operations, product development, or your overall strategy. You know how to plan, so that’s what you do. But for every goal you set, every initiative you design, there might be a better one just beyond your grasp—an innovation you don’t yet see. Creative strategy helps you see it.

1

From Mind to Method

This chapter shows how the human mind creates solutions to new problems and then translates that mental method into a series of formal steps that an individual or group can use for innovation of any kind. The mental method is strategic intuition, and my previous book Strategic Intuition explains it in detail. Creative strategy is the set of formal steps you can use to apply strategic intuition.

Strategic Intuition

To start, we must go back to three key milestones in the recent history of the science of the mind. The first came in 1981, when Roger Sperry won the Nobel Prize in Physiology or Medicine for his work on the two sides of the brain. Sperry concluded from his experiments that one side of the brain is rational and analytical but lacks imagination and that the other side of the brain is creative and intuitive but irrational. This conclusion fit the much older idea that human thought is sometimes rational and sometimes irrational. Sperry located these two kinds of thinking in two different parts of the brain.

Traditional views of innovation all conform in some way to this dual model of the human brain. They all involve some hard/soft sequence, such as deductive plus inductive reasoning, analysis plus creativity, art plus science, critical thinking plus gut instinct, logic plus feeling, and so on. Some versions add iteration: first analysis, then creativity, then analysis again, then creativity, and so on.

Unfortunately, our second key milestone overturned this dual model of the mind. In the early 1990s, Seiji Ogawa figured out how to use magnetic resonance imaging (MRI) scans to show how ideas emerge in the human brain. Ogawa has been on the short list for the Nobel Prize for some years now. His work let scientists see which parts of the brain different mental tasks actually use. From Ogawa’s first MRIs, it was immediately clear that there are not two kinds of thinking that operate on two different sides of the brain.

Although Ogawa’s work overturned Sperry’s dual model, it took science another decade to arrive at a new model to replace it. Our third key milestone came in 2000, when Eric Kandel won the same Nobel Prize as Sperry for his work on this new model. Kandel called it learning-and-memory, where the whole brain takes in and stores information through sensation and analysis and retrieves it through conscious and unconscious search and combination. In this model, analysis and intuition are not two different kinds of thought, in two different locations, but rather two key inputs into a single mode of thought that operates throughout the brain. Some thought has more analysis, some has more intuition, but all thought requires both.

Learning-and-memory gives a very different picture of how innovation works. Let’s start with analysis. We commonly say analysis is a rational or logical process, but it can never be purely so except in mathematics. We can break down the number 20 into factors of 10 and 2 or 5 and 4. Mathematics is a closed system, so we know we are right. It’s logical. But now let’s analyze something that is not pure math: the performance of your company or organization over the past decade. What do I include in my analysis, and what do I leave out? For example, the weather: Should we gather data on temperature and plot that against a measure of unit performance? If I say yes and you say no, which one of us is right? And what is our measure of unit performance? What if you and I have different ones? Which one is right?

There is no logical answer for any of these questions. In all cases, we do our best to make an educated guess. You use your judgment, and I use mine. If we disagree, we argue using logical arguments, but that does not mean our educated guesses came to us through logic. And our arguments are not purely logical at all, of course, regardless of what we might claim. So how did our educated guesses arrive? Why did I say we should collect weather data, and why did you say we should not? If not by logic, then by what?

Learning-and-memory gives us a clue. You and I have different information in our memories, which we acquired by learning different things. Although we face the same question—the performance of your company or organization over the past decade—we draw on different memories to analyze it. And we do so in two distinct ways: expert intuition and strategic intuition. These are the two main mechanisms the brain uses to apply memories to current and future situations.

Let’s start with expert intuition. Herbert Simon won the Nobel Prize in Economics in 1978 partially for his research on how experts think, and in the 1990s Gary Klein took to the field to study experts in action, such as firefighters, emergency room nurses, and soldiers in battle. In the past decade, expert intuition has become a significant field of study in its own right. Malcolm Gladwell’s popular book Blink gives a recent summary of that research.

We now know that expert intuition is the rapid recall and application of thoughts and actions from direct experience in similar situations. The more experience, the better and faster your expert intuition. So a nurse can walk across the emergency room floor, glance at a child, and rush over to save the child’s life. How did she do it? She noticed something she had seen before—in the child’s eyes, how the child was sitting, and so forth. Expert intuition happens so fast that experts can seldom explain how they did it, but Klein developed an interview method that pins down to a surprising degree exactly what they recall from their prior experience.

We develop and use expert intuition every day, in all kinds of skills and tasks. Most professional training increases expert intuition. But expert intuition can be the enemy of innovation. We see a new situation and quickly see what’s familiar within it and act accordingly. But if the situation is different enough, we’ve just made a big mistake. Expert intuition cannot solve a strategic or creative problem, which by definition is a new situation. What if our nurse’s emergency room is dirty, crowded, and losing money—and she’s never experienced that before? She can’t just walk across the floor and recall the answer from her past experience. Expert intuition won’t work.

She needs strategic intuition instead. This is a particular form of learning-and-memory that has strong roots both in the science of how ideas form in the mind and in empirical cases of successful strategy. The brain selects a set of elements from memory, combines them in a new way, and projects that new combination into the future as a course of action to follow. Strategic intuition typically occurs as one or a series of flashes of insight when the mind is relaxed. The past elements come from both direct experience and the experience of others that you learned through reading, hearing, or seeing.

Once we understand how learning-and-memory creates new ideas, we can go back to some classics of strategy and see elements of strategic intuition within them, in particular Sun Zi’s Art of War and On War by Carl von Clausewitz. Modern brain research shows that Sun Zi’s Dao philosophy promotes a state of mind conducive to flashes of insight. Modern Asian martial arts feature the same mental discipline: the do in judo, aikido, and taekwando, and the like means Dao. And Clausewitz gives four keys to strategic intuition that produce innovation in any field of endeavor: examples from history, presence of mind, coup d’oeil, and resolution.

These four steps of Clausewitz offer a useful bridge from the science of strategic intuition to the method of creative strategy. They help us see how you can make conscious use of your unconscious learning-and-memory, at least in part. Let’s look at each step in turn to see how.

In the first step, examples from history, you learn, retain, and recall in memory the elements of what others did to succeed in a previous situation. This happens naturally, because we’re human. It’s how you learned most things in life, from walking and talking to sports and calculus. But it can happen actively as well through study. And here we meet Clausewitz’s main example: Napoleon. By studying what Napoleon himself described as the eighty-three campaigns of the great captains whose high deeds history has transmitted to us, he had an arsenal of elements to combine in each new situation he faced.

The second step, presence of mind, has a direct parallel in the Dao philosophy of Sun Zi and Asian martial arts. You must free your mind of all expectations. You expect the unexpected, as Clausewitz puts it. This is actually very difficult to do. The two biggest obstacles to presence of mind are excessive focus and negative emotions. Excessive focus means you can’t let go of your current understanding of the problem, your goals, your timeline, options you’ve already listed, and so on. You must free your mind of all of that in order for your brain to make new connections. And all kinds of negative emotions—anger, frustration, worry, fear—flood the brain with the hormone cortisol, which blocks recall. You literally cannot think creatively.

The third step, coup d’oeil—or glance in French—is the term Clausewitz uses for a flash of insight. Modern brain science shows how presence of mind fosters flashes of insight. When your mind is clear, selected examples from your memory combine in a new way