AIPIS 60 - Jeff DeGraff How To Jumpstart Innovation
7 Dec 2025 · 33 min
Jeff DeGraff explains how to jumpstart innovation by creating constructive conflict, avoiding over-planning, and letting self-authorizing leaders build momentum. He emphasizes failing early and often, iterating through versions, and launching from the outside in rather than top-down.
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It's my pleasure to welcome Jeff DeGraff to the show. He is the creator of the Competing Values Framework and he's known as the dean of innovation. He's author of a new book entitled Making Stone Soup how to Jumpstart Innovation Teams. And you may recognize his name from PBS and it's a pleasure to welcome him to the show today. Jeff, how are you?
Good to good. How are you, Jason? Good.
It's good to talk with you. And just to give our listeners a sense of geography, where are you located?
I'm in beautiful Ann Arbor, Michigan, way up in the northern part of America, surrounded by 95% of all the fresh water in our great country.
Right. Fantastic. Good stuff. Well, it's definitely beautiful there in the summertime, no question about that. So tell us about the book and how you came to write Making Stone Soup.
Well, it seemed to me that one of the challenges that groups have is that they don't know how to put together an innovation team and they don't know how to make innovation happen in a relatively fast way. Now I do a lot of work with very large companies, you know, General Electric and you know, Apple and Boeing. And what I thought was I needed to write a book for everybody else. The people who can't really put a project in an innovation lab and they do it in a very visual, very simple way and to do it with some very simple steps that anyone can do.
You've got several books on leading innovation, Innovation, Innovation, you four Steps to Becoming New and Improved. And it's such an important area, no question about it. So what can everybody else take from your work? You've worked with the Fortune 1000 for sure. You've been behind some big, big innovations there. Feel free to talk about those. But you know, let's try and bring it to the personal or small business level too.
Well, first, first of all, there's a few things that people get very wrong about innovation. Innovation isn't an amateur sport. That's my favorite one where people say, well, you know, anybody can do it and they read on creativity and all of a sudden they're great innovators. But of course that's not true. If you're trying to do something and you're a small biotech or you're somebody who's a small restaurant, you actually have to know something about the industry. But here's the key. Innovation is not produced through alignment. It's the one form of value that's produced through constructive conflict. Innovation is the result of ideas that don't necessarily agree, but that force hybrid ideas. Now, another big challenge that particularly smaller organizations have around innovation is that they gather too much data. And here's the challenge. Breakthrough innovations happen in the future for which we have no data now. And excessive data gathering is a form of resistance. And I bet your listeners have been to the meeting about the meeting or seen the plan about the plan, and they get stuck in that cycle. So we're going to have to do a couple of things to get things going. First of all, we're going to have to, instead of avoiding conflict, we're going to have to create conflict in a constructive way. Instead of trying to plan our way to the future, we're going to have to experiment our way to the future, kind of like a venture capitalist does. Instead of betting on everyone, we're going to have to bet on a few highly practiced people who can actually move something from ideation all the way to commercialization. Whether it's a product or a service or a solution. These are common mistakes. So one of the things I always tell people when they start is the key idea for innovation under any scenario, no matter how large your company is, is to get momentum. Momentum is key. Things take off with momentum. And we could talk about how you actually can get momentum and how to think about where to stage the innovation. But getting the big mo is key.
The big mo is the key to business in general. That momentum is so important. The big mo, I love it. How do we get there? How do we start that momentum? In good to great, Collins talks about the flywheel. Starting it is the hardest part. And I love what you say too about that. This is created out of conflict, out of conflicting ideas. Is it created out of conflicting people?
It is. And in fact, there's a lot of research that we've been looking at since the 1940s. And it turns out there's about 30 places on the entire planet that produce about 80% of the intellectual property that creates the gross domestic product of this planet of humanity. And when we look at what those places have in common, what they have in common, it's not the culture or taxation, it's not the Availability of funding. It's not a lot of the stuff that politicians love to talk about. It's none of that. What it is is they're highly diverse areas. And what we believe is the reason that they're highly diverse and they have this correlation to innovation is this diversity. People who don't believe the same things maybe don't eat the same dog food, don't, you know, don't go to the same places, they have different ideas. And when these ideas collide in a constructive way, this is key, constructive. It produces these hybrids. Now in order to get momentum, what you need is a little, a little match for this Tinder. And so what we also find in these places, in these highly diverse places are people who exhibit what we call self authorizing behavior or meaning ownership. And I want to give you a great example. Very early in my career I was an advisor in the early 1980s to Apple for what was called Applied Integrated Systems. Now you got to remember there's no Internet yet. We're well above, we're well before, a decade before the Internet. And I'm a very young PhD in artificial intelligence. And I'm trying to provide some advice here. And one of the things I learned from Apple very early on that I think Steve Jobs really got right was he didn't really bet on process at all. There wasn't really any great process. What he bet on were these self authorizing leaders. He called them Apple fellows. They exhibited this behavior where they could take an idea, develop ownership for it and navigate through this conflict through this system like an ambassador, speaking all the languages, where you've got the vision and you're connecting it to the process and you've got the values, you're connecting it to the goals. And these people were amazing at that. So I want you to think about this like maybe a movie that maybe some of your listeners have seen. I want you to think about this like Moneyball, remember the movie Moneyball where they're kind of the Oakland A's of general manager Billy Beane is kind of messing with the formula and he's continually trying to find what the right formula is. He's somebody exhibiting self authorizing behavior. And of course eventually they get it right. So that's the first thing. The second thing is forget the 8020 rule. The 8020 rule is the kiss of death for innovation. That's for efficiency, wonks, innovation. The rule is the 2080 rule. And it goes like this. It's much easier to change 20% of your organization, 80% than it is to change 80% of your organization 20%. And here's why. If you drew a bell curve, Jason, if you looked at a bell curve, sort of imagined a bell curve, at one end of the bell curve, you have a crisis. Think about people when they get in a crisis. You know, they got a problem drinking or they lose their job or they get a divorce. Why do people change when they're in a crisis? And the answer is simple. Because the reward of staying where you're at and the risk of trying something radically new is reversed. Now that's not just true for individuals. I want you to remember in 1997, Apple was trading below $5 a share. The Wall Street Journal said Apple was dead. The same is true for people. The same is true for small companies. The same is true for big companies. Right now, the other end of the bell curve, when a company or a person's on a roll, they're in love, they get a promotion, they get married, something great has happened to them, it turns around again. This is what we call risk capital. The risk of trying something radically new and the reward of staying at is reversed. Now here's the mistake people make. They try and launch the innovation right up the middle of the organization, which is designed to maintain its equilibrium. It's designed to get rid of deviance and variation. Innovation moves from the outside in, not from the inside out. So now we've got self authorizing behavior and a few individuals getting momentum. We're launching from the outside in where resistance is going to be lower. And finally, you want to fail early, you want to fail often, and you want to fail off Broadway. I'll give you a real story.
Fail off Broadway, I like that. Yeah.
I worked on a project many, many years ago for Coca Cola. It was a project called C2. And the project wasn't selling very well. And it's the greatest marketing organization, in my opinion, in the world. And they have some of the greatest products in the world, but they were having little trouble with this product. One of the things that we did was we moved the product across the street to where we could work on it. And it was kind of hard for people to look over our shoulders and figure out what we were doing wrong. And we launched the product in many places that were very hard to see in various versions. So version one, version two, version three, some versions had different packaging, some versions had different sweeteners in them, etc. Well, what was interesting about that, very quickly, off Broadway, where people can't see and close your show, we began to Figure out what people liked. And of course, when we brought the product back, we repackaged the product. The product was called Coke Zero, right. But now we had real information because we didn't fail on Broadway, we failed in New Haven, where the critics weren't watching us. And we were able to make the adjustments to our show to make it work. So those are three things right off the bat and that anybody can do to get momentum.
Really. It seems like one of the issues here with innovation is that the efficiency of the modern corporation, the software, the systems, the business rules, the business processes, they're stifling to innovation, aren't they?
They are.
They're really contrary. Like you said, the 8020 rule, that's for the efficiency wonks, that's for the guys and the process engineers. But if we want to create something new, we can't be working with those people in those systems, right?
Well, we can as long as those systems follow the radical innovation. They're what we call the aft position. So most of what we take to be innovation systems, stage gating systems, portfolio management systems, are things that happen after ideation and the development of the, for lack of a better term, the Eureka idea. The problem is we put them in the wrong order. Yeah.
What is stage gating?
Stage gating means that typically when somebody comes up with an idea, there's a suggestion program or an ideation part, and then there's a business plan, and then it goes to manufacturability. At the very end, you figure out how to market it and make a zillion dollars on it. But the way that system is designed in most innovation systems in organizations that are taught is to spend very little money at the beginning and at the very end, to spend all your money when you've worked out all the risk. But of course, the problem, Jason, is when you've worked out all the risk, you've also worked out all the variation or all the innovation. What's happened is when we look at patents applied for, this is astounding America in the past 10 years, and there's been a lot written about this, we have a lot more patents and the patents are much more incremental than they were in the previous decade. We believe that the reason we're losing our competitiveness and innovation is that we've put all these innovations into these high density throughput systems. And what that's done is eliminate the real variation, the alternative way of doing it, the blind spot, the non dominant way of doing it.
I sort of wonder though, that reminds me of the head of the patent office in like 1890 or of course, you know, this quote I'm about to say, and I wonder if the reason the patents are more incremental now is because, as he said, in the 1800s, everything's already been invented.
Yeah, some people say that. Boy, I don't believe that for a second. In fact, I believe we are on. I believe we are at the beginning of something radical, but very different than what a lot of people write about in the popular press. Let me talk a little bit about digital natives and digital immigrants. Here's what's going on. I'm a baby boomer and I worked in artificial intelligence on applied integrated Systems in the 1980s. I worked, like a lot of people, on what would become the Internet. I worked at the Helsinki School of Economics when I was a junior professor when SMS was being developed. A short messaging service, Right. And we could have. And it was originally developed so line engineers could order parts from other line engineers while they were up at the top of telephone poles. It never occurred to anybody in my generation, I believe, that young people would be Twittering with 134 characters that they'd be doing the things that they would do because of this one fundamental social thing that we didn't anticipate, which is digital natives. These are people who are born between 1990 and now. People born in the world of technology have a horizontal view of the world Gen Y. And what I mean by that is they've opted out of our big institutions. So let me give you some facts your listeners might be interested in. And I'm not trying to be controversial. I'm trying to lay out some groundwork here. And that is, do you know that over half of the live births to women under the age of 30 last year, for the first time, over half are outside of marriage. Young people are not marrying. Do you know that the number one job category that young people want to belong to under 30 are what are called NGOs or non government organizations. They're not for profits. Young people have opted out of a capitalist system, which is alarming if you're a business school professor who's been married for 20 some years. And finally, the fastest growing religious segment between 2000 and 2010 for people under 30 and is atheism. So what we've got is we've got young people who don't believe in the institutions that my generation created. What they believe in is each other. And so, like the great study from the Pew research which looked at these millennials and how they communicate it is quite literally they text each other more than they talk. They collaborate infinitely more than we do. They don't acknowledge boundaries. They have portfolio lives. They have a radically different social view of how society is constructed. They don't see race the same way. They don't see nationalities the same way. So what's happening, I think that is enormous in innovation is that we're starting to see not so much the development of radical new technologies, although we are seeing some of that. What we're seeing is the application of these technologies in ways that we could not have imagined 20 years ago. And that's the fundamental shift. They're not going to work like my generation. They're not going to buy like my generation. They're not going to live like my generation. And I don't think most of your listeners out there are prepared for it. You can be judgmental about it. You can say, well, I don't like this. Well, whether you like it or not, this is what's happening with young people. And our voices are going to get softer and theirs are going to get louder. Innovation, the innovation of the world will pass to them.
So can you just elaborate on the horizontal? They see the world in a horizontal way. I mean, contrast that with like how does a Gen Xer or a baby boomer see it if that's the way Gen Y sees it?
A baby boomer sees institutions as opportunities to reform them and move up them. So we believe in education. We're the most educated. We are the most educated group in the history of the world. Baby boomers. Remember our parents, 2% of our parents generation had a college education. That completely changes in my generation, right? With the whole idea of moving up in the corporation, the whole idea of entrepreneurship is to build, take a small company and build it into that bulge bracket, huge company. We had a student here at Michigan and a couple decades ago when I was starting out, Larry Page, who created this little company called Google. The idea of boomers and Xers is you're going to build this into a colossus, into something bigger. We own bigger houses, right? This is our generation. This next generation has opted out of that hierarchical vertical way of doing things. And there's probably a lot of good social reasons. They haven't had the opportunities that we have had. Maybe they've seen the failures of our generation, but they've taken a very different track. They are guided by their values horizontally where we're guided by our goals vertically.
So digital natives are Gen Y and everybody else is a digital Immigrant, right?
Basically, yeah.
Very interesting. In your long work with pbs, you brought a lot of this down. Jeff, to the personal level, I believe that is what your book Innovation youn is about, is the more personal side of this. Can you talk about how we can use this in our individual lives or even the small business solopreneur life as well?
Absolutely. It's very interesting. Let me tell you how the book came about. I think it'll be interesting. I was writing a book for Harvard Business School Press, and it was sort of one of those classic. I'm a business school professor at Michigan for 25 years, and it was one of those classics. Let me show you all the kind of complicated stuff that we do to measure innovation. And let's show you what the Federal Reserve does with our work. But when the crash of 2008 came, people that I had had as students and people I'd known in professional capacity who should never have ever been unemployed, were all of a sudden unemployed. And I was kind of astounded that these brilliant people had trouble applying the same lessons that they had led their great businesses with to their own lives. And so I wrote this book with the assumption or under the idea that, what if you were a business? What advice would you give yourself? And it came down basically to this. Just a few things. Number one, there are four things that you really need to be able to do in order to make innovation happen. And I actually write about this also in Making Stone Soup only I write about this how to jumpstart teams and small companies. So in Innovation U, it's about what you do personally. In Making Stone Soup, it's about how to do this as a team in a company. Right. In a small company, the first thing you have to do is you have to have a high quality target. You know, you get those people who say, well, you know, I'm having trouble with my life. So what I'm going to do is I'm going to imagine a completely different life. And there's all that kind of New age stuff out there that you can be anything you want to be. I call it trying to boil the ocean and extract gold. You know, it's a formula for failure because it's beyond what you're capable of doing. My favorite example is look at things like American Idol auditions. You know, people caterwaul, they end up getting 5 million hits on YouTube because people are making fun of them because they've overplayed their hand. Right. Well, the other side of that is people like to sort of tinker with the dial and they think that their high quality target is doing something slightly different. That's not what you want to do. What you want to do is look at your capabilities. You want to have a sense of destiny and a long term goal. So you want that sense of positive affirmation, but you also want to take it step by step by step. So it's kind of like losing weight or lifting or lifting weights or getting an education. You know, you take algebra before you take geometry before, you take trigonometry and so on and so forth. So the idea of a high quality target is that something that's just a little bit beyond what you can achieve now. Because remember, what we're trying to do is get momentum, we're trying to get personal momentum. So this is the person who's trying to build their business. So rather than trying to triple the income of your business this year, what you really want to do is in the next 90 days, see if you can increase your volume by 5%, something that you can achieve. The second step, which people have in their lives is you want to surround yourself with deep and diverse domain experts. Now this is not amateur hour. So if you're trying to build a business, what you really want to do is talk to people who've built the business. But here's the key. You don't want to align yourself. What you want to do is you want to create diversity. Because remember, we want conflict. And I want to tell you why that's so important. What destroys more small businesses than anything is that they don't look in their blind spot. You know, maybe it's a regulation that they didn't get on top of. Maybe they couldn't manage their cash flow, maybe they didn't see a disruptive technology, maybe they didn't see a large or mid cap company move down into their space. It's the same with individuals. And you don't have to be a PhD or some kind of a person who's built a mega company. It might be if you're trying to be a parent, what you want to do is talk to a single parent, talk to somebody who's got five kids, talk to maybe a same sex couple. Whatever it is, you're trying to get different opinions so that you can actually see the range of options. Now the third thing you want to do is take multiple shots on goal. And this is the part I guess is the hardest part for people, because people want effortless superiority. You see this when people try to quit smoking or lose weight, they'll be going along really well for, let's say, a couple months. And then something will go wrong. Some crisis will happen in their family. They'll have the binge weekend or whatever it is. And most of those people are derailed. They think that everything is lost because a couple days went wrong. In people who are successful. This will tell you no. What you want to do then is try another track. So maybe it's this eating this that works for you, or maybe it's going to the gym at this time that works for you. But there's a lot of fiddling around here. And the reason is what you're trying to do is you're trying to accelerate the failure cycle. This is very important. This is the most important thing. Innovation is not born from success. It's born from failure. Because all learning is developmental. If you don't believe that, have your listeners take out a piece of paper and draw a picture of their spouse. And anybody can tell at what age they stop learning to draw, speak a foreign language, play an instrument. It doesn't matter whether you're 8 or 80, it's developmental. You've got to learn to do it. Innovation is about what you don't know how to do now. So if you don't take these multiple shots on goal, you're never going to get any smarter. You have to go through the failure cycle. And what innovators do is they don't avoid it, they accelerate. That's what venture capitalists do. That's what the burn rate is. The burn rate is. I've hedged my portfolio, diversified it, I've turned it over to try and find out what really works, what therapy is really going to cure that disease. Well, the final step, the fourth step, is you have to learn from your experience and experiment.
Okay, before you go on and talk about the fourth step on the accelerating failure, the idea is to fail quickly, learn from the failure and apply what you've learned, right? I mean, fail fast, because then you.
Fail early, fail often, and fail off Broadway. Don't fail in front of big customers, don't spend a lot of money or time. If you do that, then there's a real downside to failure, you know, and you can't fail on things that you can't. You know, if you're trying a new surgical procedure, you don't want to fail. You're bringing an aircraft back down. You don't want to fail. So there, there are ways to do that with larger, with larger projects. But the final step is to learn from experience and experiments. And I'm just. I'm always amazed at people who have failed but don't seem to get any smarter. They don't sit down and talk about what worked and what didn't work. You know, I have a friend who's been married several times, and he was calling me the other day. He was talking about he's on his fifth marriage. He was talking about, you know, that he's having problems. And I keep emphasizing to him, you know, maybe it's not the ladies, maybe it's you. Maybe you need to sit down with yourself and talk about what doesn't work and why. What does work and why. And incidentally, to all your listeners, never try and fix what doesn't work because things don't work for a million reasons. Try and build on what does work, because remember trying to get momentum. Then you want to ask yourself, well, what should I stop doing or do less of? Just like if you're holding a portfolio of stocks, what should I start or do more of and what should I hold? Now again, you want to stop before you start. And the reason is people don't have capacity anymore. We don't have think time. This is what you meant, Jason, about the whole idea of having soak time to work on something. Until you're willing to stop something, you're not going to have capacity to start something. I was coming back from Shanghai the other day on a plane and the lady next to me is a lawyer, and she was telling me about a novel she wants to write. And I said, okay, that sounds great. It was a great idea. And I said, how is it going? And she said, well, I haven't. I haven't started it yet. And I said, well, how many years have you had this idea? She said, about 20. I'm going to write it when I retire. And I just stopped for a minute and it was very polite to her. But I said, it doesn't work that way. I've written, you know, I've written so many books. I said, it doesn't work that way. The writer's right. If you're going to write a novel, you're never ever going to have more time, ever. That's, you know, the nature of horrors of actuarial. It's going to fill up your life. What you have to do is start writing now. And she said, I don't have time to write now. And I said, that's why you have to stop some things. They said, what are you willing to stop? And she said, well, I'm not Really willing to stop anything right now. And my response was, that's why you're not moving on your novel until that's the real cost that your listeners need to get. Everything costs something. Anybody who tells you different is trying to sell you something. So what are you willing to stop before you start something new? So you have head time, you have resources, you have money, all the stuff you need and finally, finally develop some simple rules about your life. I love Teddy Roosevelt. Teddy Roosevelt was filled with these things like do what you can with what you have where you are. You have a million of these. Once you've gone through the failure cycle, you should be smarter so that the next time you come up with a high quality target. So now you're on version two of your diet, or you're version two of your education, version two of quitting smoking, whatever it is, you're that much smarter. And the same is true for making stone soup. When you're trying to create an innovation, when you're trying to launch an innovation initiative in your small company, you're not going to get it right on the first version.
If you got it right the first time out, then your innovation is incredibly incremental or you are insanely lucky. If you're insanely lucky, your luck will run out on you sooner or later. And if it's incremental, somebody else isn't playing incremental and they will pass you by in the near future. So the notion is you create your plan, you launch your team, you create your personal idea with the concept of versioning that this is version 1.0, there will be a version 2.0, and so on and so forth.
As you're talking, you just remind me over and over again, and you've driven the point home very well, that life is an iterative process and the lean startup of concept there is great. You do version one, you look at feedback, you improve it, and you do version two. And like the lady on the plane that wants to write the novel for 20 years, so many people, myself included, many times I noticed this behavior in myself or this thinking at least. And well, it turns into behavior, unfortunately, where I'm trying to get all the stars to align before doing something. And the people who really get on in the world and have success, they just kind of jump in and do stuff imperfectly and just do another thing after that, you know, can you imagine?
I teach at one of the great research universities of the world. It's always ranked in the top, you know, top 20 research universities on the planet. The biggest problem I see in junior faculty that I try and have them overcome is effortless superiority.
Effortless superiority.
It doesn't work that way. We all learned. You know, there was always the two kinds of parents on the playground when I grew up. The one that always told the child not to do something. And then like my dad, he was always hurt. Didn't it rub dirt on it?
Yeah.
In which child learned faster? It was always the second child because they went through that cycle. So we think we're helping people by saving them from the pain of failure. But think of your. Imagine if all your dreams came true when you were 16. You know, you married, you know that girl and you got that car and you had that job. Would you be happy at 36 with that life?
You'd be bored by then. Probably.
Terrible. And so the great thing about being imperfect is it pulls us forward. Think about one of my heroes is Benjamin Franklin. You know, a penniless runaway, right? A guy who starts out as an entrepreneur and then he becomes a, you know, a syndicate newspaper editor. And then he invents a bunch of stuff and he's a patriot and you know, he creates the library system. But, but he said. But what pulls Benjamin Franklin forward is that at every given turn he feels that there's more to do. And isn't that kind of a neat part about life, that there's growing that goes on?
Oh, yes, absolutely. Wonderful.
I think that's why people innovate. I think people innovate because they want to see what else there is out there. And I just really want to encourage people to grow. That's why we're here.
Yeah, great point, great points. Well, Jeff, give out your website, of course the books are on Amazon with great reviews. Just give out any resources you'd like people to have.
Well, I'd say just. I'd say three things. Making stone soup. I'm very proud of it. If you've got a team and you're trying to jump start a team, I'm taking all the stuff I learned building these great big things, ecoimagination, etc. And I'm giving it to people who don't have that resource in a very simple way. It's filled with assessments and videos. It's the how to thing. Very inexpensive. Really like the way the way that book was done. If you're interested in my work, go to jeffdegraff.com, d, e, g, r, a, f, f jeffdegraaff.com it's filled with free stuff. No one will ever bother you. And finally, if you're interested in innovation and particularly how it relates to life, innovation, leading innovation, and life in general, I would recommend that your listeners follow me. I'm one of the original 100 LinkedIn writers, one of the original influencers on LinkedIn. So Jeff DeGraff, the dean of innovation.
On LinkedIn, thank you so much for joining us. That's Jeff DeGraaff, everybody. And check out his websites and his books. We just really learned a lot today. So thank you for joining us.
Jeff thanks for having me, Jason. I appreciate it.
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