Lateral thinking: how to build individual creativity and innovative organisations

Launched in 2012, YourStory's Book Review section features over 310 titles on creativity, innovation, entrepreneurship, and digital transformation. See also our related columns The Turning Point, Techie Tuesdays, and Storybites.

Long-term business success comes not just from continuous improvement but leaps of innovation, as seen in industry shifts through the decades for products ranging from vacuum cleaners and LPs to software and cars.

Tips for business creativity and organisational design are well-described in the book The Leader's Guide to Lateral Thinking Skills: Unlock the Creativity and Innovation in You and Your Team, by Paul Sloane.

Creativity involves generating new ideas, and innovation is about implementing them. Organisations need focused creativity to come up with better products, services, processes and partnerships.

Innovation belongs not just to the R&D department but others as well – marketing, sales, HR, finance, and IT, the author explains. The third edition of his book is packed with checklists and examples of business creativity (though the reading section could do with more recent updates).

Paul Sloane is the author of How to Be a Brilliant Thinker and The Innovative Leader, and editor of A Guide to Open Innovation and Crowdsourcing. He was earlier at IBM, Ashton-Tate, MathSoft and Monactive.

“Innovation is something that can be developed, encouraged and managed,” Paul begins.

Here are my key takeaways from this delightful 190-page book, summarised in the sections below. See also my reviews of the related books Mix and Match, Social Chemistry, The Art of Noticing, Non-Obvious Trends, The Serendipity Mindset, Experiencing Design, and The Creative Thinking Handbook.

I. Foundations

Leaders need to set a clear purpose and vision for the organisation and the contribution of innovation, based on which strategy, values and organisational culture are built.

The vision statement should be short but inspiring, ambitious but achievable. It helps create alignment towards a shared goal. The culture should be open, questioning, and receptive, Paul describes.

Conventional leaders give orders, communicate via memos, hire based on experience, build effective managers, reward performance, and focus on efficiency. In contrast, lateral leaders solicit suggestions, build entrepreneurial teams, empower employees, reward risk taking, and hire based on creative potential.

People should be empowered at all levels to suggest and try out ideas. Steps for risk taking should be spelt out, and failure should be treated as a welcome source of learning, Paul writes.

Innovation paths should be defined with deadlines and clear metrics, along with departmental and personal objectives. Such measures could be the number of new products, percentage of revenue generated from them, or new strategic partnerships.

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Encouraging debate about the vision helps create a sense of ownership, and correct anomalies. The vision should be communicated and reinforced over and over again so everyone understands their roles. Clarity of purpose is key, according to Canadian serial entrepreneur Stewart Butterfield, founder of Flickr and Slack.

All employees should be given training, guidance, coaching, and mentorship in creativity techniques. This helps create a sense of empowerment and trust.

“Trust does not mean there is no supervision,” Paul cautions.

Employee confidence in idea suggestion, experimentation, and risk taking should be increased and supported. “You have to let people articulate their fears and tell you their concerns,” Paul advises.

Based on these attributes, the author provides a diagnostic test for business leaders to assess their maturity as innovative organisations. Accordingly, businesses are classified as resistant to change or enlightened, with many stages of improvement scope in between.

II. Creativity techniques

Thinking skills, creativity, and imagination are the key to effective problem-solving, Paul affirms.

Workshops and regular training can help increase creativity skills and confidence of employees. It begins with the ability to ask searching questions, thus building a “questioning organisation”.

1. Question rules and assumptions

“Is tempting to appear decisive by jumping straight to the conclusion and making rapid decisions,” Paul cautions. Deep probing and open-ended questioning, sometimes assisted by external consultants, help unearth unquestioned assumptions about industry structure, business rules, and problem statements.

Paul cites a French company that requires new employees to submit an “astonishment report” after their first few weeks at work. Other examples of leaders who have welcomed employee suggestions include Branson, Bezos, and Musk.

Lateral thinking techniques involve finding radically new approaches to problems. Examples include Michael Cullen’s creation of the first supermarket, with customers serving themselves.

History is full of stories of those who successfully challenged ingrained assumptions in their fields, eg. Copernicus (sun as centre, not earth), Marconi (radio waves across the Atlantic despite earth’s curvature), and Fosbury (high jump flip).

Business examples include Ford (car assembly line), McCormick (reaper payments in instalments), Body Shop (simple packaging), Grameen Bank (micro-credit supported by solidarity groups), Linux (open source movement), Netscape (browser distribution online, not via desktops), and Uber (shared mobility). Other examples of industry shifts are containerisation (shipping) and detergent tablets (instead of powder).

Experts, however, are often incapable of shaking off deep assumptions, as seen in Siemens (electric light over gas), Rutherford (possibility of nuclear energy), Kelvin (potential of radio), and Olson (home computers).

Paul cites other successful rulebreakers like Heinz (squeezable ketchup bottles), IBM PC (open system instead of proprietary), Dell (direct PC sales), USA Today newspaper (national; colourful), Tesla (open access to electric car patents), and GoldCorp (open access to geo data for drilling options). Equivalents in sports are rugby as a breakaway from soccer, and American football from rugby.

“Recognise that your business has all sorts of unwritten rules that guide and limit you,” Paul urges.

Some rule-breaking can initially seem counterintuitive or even controversial, eg. Amazon listing second-hand books instead of only new books. This was seen as better for customers, despite lower margins for sellers of new books. Amazon has had a string of successful innovations in a wide range of sectors, despite occasional flops like the Fire phone.

2. Combination and adaptation

Innovation also calls for cross-organisational and even cross-industry combinations, as seen in the merger of Swiss watch manufacturers ASUAG and SSIG to create Swatch, or the collaboration between Mercedes and Swatch to create the Smart city car. Other examples are the Gutenberg press (coin punch with wine press) and Trevor Baylis (clockwork radio).

Another creative technique is adapting ideas from other sectors. Examples include Clarence Birdseye (frozen food industry inspired by practices in Labrador), Graham Bell (telephone modeled on the ear), Samuel Morse (telegraph relay stations inspired by stagecoach stations), George de Mestral (Velcro modeled on plant burrs on fur), and roll-on deodorant (inspired by the ballpoint pen).

Paul cautions that if companies don’t support their employees’ innovative ideas, they may leave to launch their own startups, eg. Bob Metcalfe and LAN (Xerox Parc, 3Com), and Dan Bricklin and spreadsheets (DEC, Visicorp).

Useful creativity tools here are visual brainstorming (eg. mind maps), fishbone analysis, Five Why’s, and Lotus Blossom.

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3. Serendipity

Serendipity and chance also play an important role in ideation. “Welcome the unexpected,” Paul advises. “Search out different and even random people if you want different and radical ideas,” he adds.

He cites a range of serendipitous discoveries: penicillin, Velcro, and the microwave oven. “When something unexpected happens don’t get annoyed, get curious,” he suggests.

4. Idea flow

While these measures help get better quality ideas, it is important to increase the quantity or flow as well. This helps go beyond the obvious and easy ideas, Paul explains.

“Do not criticise new ideas, no matter how silly,” he advises. It is better to document them and then improve or combine them.

For example, Toyota’s suggestion scheme is embraced by 95 percent of its workforce, generating about 30 suggestions per worker per year. Over 90 percent of these suggestions are implemented, according to cited research.

Innovation is also the culmination of iteration, as seen in WD-40 (40th formula for lubrication) and Angry Birds (after 51 earlier attempts). Successful innovators have been persistent in the face of rejection, as shown by Cisco (76 pitches) and Google (350 pitches) in their early investment hunt. Each rejection was seen as a chance for refinement, Paul explains.

Once ideas are generated, they need to be analysed, evaluated, and selected, depending on factors like feasibility, customer need, and profitability. Some ideas should be revisited later though they may not be immediately feasible. Paul recommends that a mix of individual and group voting should be used, with a combination of silent and open methods.

Different evaluation criteria are used by companies like Synectics (novel, attractive, feasible), Tesco (better, simpler, cheaper), and GSK (35 gates). Validated testing has been practiced by companies like Threadless (consumer voting) and Gustin (pledge to buy before making).

5. Prototyping

“Nothing turns a concept into reality faster than a prototype,” Paul observes. 2X2 matrices can be used to evaluate risk and reward, as well as business impact and implementation effort.

Prototyping helps in seeing, touching and feeling the ideas. Examples include Edison (thousands of prototypes) and Dyson (5,000 prototypes of the ‘dual cyclone’ vacuum cleaner).

6. Learning from failure

Learning from failures is key for those who want to take long-term chances. Paul distinguishes between “honourable failure” (which should be rewarded) and “incompetent failure” (eg. due to lack of effort).

Early “failures” should be carefully analysed and can be repurposed for other markets. Examples include the Jacuzzi (initially for arthritis patients, then positioned as a luxury item), 3M (Post-It), Pfizer (Viagra), and Honda’s early forays into the US market (from small city motorcycles to high-powered highway bikes).

When companies pick innovation directions, they should also have a fallback plan in case of unexpected shifts, eg. regulatory changes. Alternative scenarios should be explored where some decisions are reversible, Paul cautions.

7. Organisational practices

Companies like 3M also set aside time for employees to experiment with creative ideas beyond the scope of immediate work. Sometimes, separate departments will be needed to spawn new products, eg. IBM’s ‘skunkworks’ to crate the PC.

Some organisations have innovation challenges, and seek suggestions to solve problems. Paul cites a cosmetics company, which received employee ideas for increasing toothpaste sales (increase the diameter of the hole) and shampoo (add the word ‘repeat’ in the instructions).

Google solicits ideas on an intranet page. Mattel has used cross-functional groups to come up with new toy designs, not just the regular designers.

Customers and consultants are also good sources of ideas, though customers may be better at suggesting improvements than radical new products. Customer complaints are a rich source of insights as well.

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For example, Fluke Corporation observed the habits of its customers and provided downloadable records on its measurement products. Levi Strauss developed pre-ripped jeans after noticing customers ripping jeans.

Companies should hire lateral thinkers, who can be spotted by the kinds of creative hobbies they have, and have demonstrated experience in risk taking and even failing. Another good indicator is the kinds of questions they themselves ask during interviews, Paul suggests.

Innovative organisations also recognise and remove creativity blockers, such as a culture of blame, discouragement of unusual ideas, overworking, lack of facilitation for brainstorming, and wrongly-aligned rewards.

III. The road ahead

The last chapter describes what an innovation leadership workshop or course could look like, spanning stages from vision and product analysis to cultural design and communication.

The appendix is packed with descriptions of 26 creativity tools and techniques. They include six thinking hats, games (random word connections, similes, worst solution, idea cards, found objects, successive integration, rapid fire storytelling), and methods (SCAMPER, PEST).

“The organisation needs to develop a restless quest for creativity, improvement and self-renewal at all levels,” Paul signs off.

The book is packed with witty and inspiring quotes, and it would be appropriate to end this review with the sample below.

Genius is seeing what everyone else sees and thinking what no one else has thought. – Albert Szent-Gyorgy

People are not afraid of change. They fear the unknown. – Dick Brown

Every organisation has to prepare for the abandonment of everything it does. – Peter Drucker

The best assumption to have is that any commonly-held belief is wrong. – Ken Olson

It is better to know some of the questions than all of the answers. – James Thurber

You cannot look in a new direction by looking harder in the same direction. – Edward de Bono

The best way to get a good idea is to get a lot of ideas. – Linus Pauling

It is not what we don’t know that gets us into trouble. It is what we think we know for sure. – Mark Twain

Problems are just opportunities in their work clothes. – Henry Kaiser

Most companies are built for continuous improvement, rather than for discontinuous innovation. They know how to get better, but they don’t know how to get different. – Gary Hamel

YourStory has also published the pocketbook ‘Proverbs and Quotes for Entrepreneurs: A World of Inspiration for Startups’ as a creative and motivational guide for innovators (downloadable as apps here: Apple, Android).