• Thomas Schwarzenfeld

Why we waste 99% of our innovation capacity!

Updated: Feb 1


Keynote Transcript

Thomas Kraker von Schwarzenfeld

Fraunhofer AHEAD conference in Munich

4th of March 2020


Innovation: the most human of all properties.


3D Printing, Artificial Pancreas, Augmented Reality, The Birth Control Patch, Blockchain, Capsule Endoscope, Digital Assistants, E-Cigarettes, E-Readers, Gene Editing, High-Density Batteries, Mobile Operating Systems, Multi Use Rockets, Online Streaming, Retinal Implants, Robot Heart, Robotic Exoskeleton, Small Satellites, Solid-State Lidar, Tokenization and Touchscreen Glas.


These are the 21 most important innovations of the 21st century according to the widest circulated newspaper of the US, the “USA today”


I believe everybody agrees with some of them as being the greatest and has lots of others that should be added to this list.


We are living in the age of innovation and the pace of innovation is constantly increasing.

It took us almost 30 million years to come up with the first tools and another 10 million until we started to use fire. It still took one million years from there to get dressed, but only ten thousand years from the first clothes to the first boat. And from the first time we used iron to the invention of the wheel it only took us 500 years.


Since then we have invented uncountable things and technologies at an ever-increasing speed. Concrete, religion, writing, electricity, guns, cars, airplanes, abstract art and in 1982 the IBM PC.


And from there on things only got faster again. We invented GPS, the CD-Rom, PowerPoint (OK - not humanity’s best invention) and the Internet before the end of the millennium, which had started us off on horseback and without central heating.


And all the 21 wonderful inventions I started this text with, and uncountable other great inventions that we already use in our daily lives, were invented in just under 20 years.

The times we are living in are indeed the most exciting and innovative of all times.



But why do we innovate?

I started my first company in 1989. A pizza delivery company. And delivering pizza at that time was a huge innovation in my small home town in the southwest of Germany. I worked 20 hours a day seven days a week to get the company off the ground. One of my former classmates one day asked me why I work so much, why I am doing this? I didn't need to think much to find the answer. I wanted to impress the girls.


The reason we innovate can be understood best through the emotional lens that motivates us to do pretty much anything else in life.


Feelings of fear, greed, love, ego, ambition, and necessity all play a role in this process but fundamentally we innovate to solve problems.


And my problem in 1989 was not having a girlfriend.


I finally solved that problem 14 years and 5 companies later by opening a new innovative kind of bar that led to my meeting Anita, now my wife of almost 11 years.


To take it back to our evolutionary biology, innovation is the process of creative problem solving to increase our chances of survival.


It is Darwin’s survival of the fittest in action.


As humans, we are hardwired for problem-solving. When we see something that we can improve in order to increase our chances of survival, I am hard-pressed to find someone who would not take action and innovate.


So why is it so hard for us to truly innovate? Why aren’t we churning out new world-saving ideas on a daily basis? If we are hard-wired and evolutionarily trained to innovate why don’t we invent the next big thing every morning before breakfast?


To understand that we need to understand the difference between evolutionary innovation and disruptive innovation.


Evolutionary innovation or incremental innovation is what humans do best and we Germans are known for. We build something incredible and then make it better step by little step.


This kind of innovation is what our brains are made for. During the past 10 thousand years, we learned how to increase our chances of survival for instance by improving the way we grow crops on a field. Instead of risking everything by trying a completely new growing method, not knowing if we would have anything to eat in the coming autumn we took the method that worked last season and used it this season, trying to apply it slightly better. And that made sense for our ancestors.


But today innovation works completely differently. And our brains are actually not trained for this kind of innovation. Everything that helped our ancestors to crawl out of the cave and get into a highrise hinders us from coming up with real breakthrough inventions today.

Today innovation still is a question of survival but mostly not for us personally, but for the startup, the cooperation or organization, we work for. And if we look at the biggest challenge we are facing at the moment, climate change, humanity as a whole might be at stake. We just haven't internalized it yet.


Since 2000, 52% of all Fortune-500 companies have been displaced and 40% will be disrupted in the next 10 years.


In order to keep up with today’s speed of innovation and disruption, we need to change the way we innovate.


We need to go from making existing things better with many little upgrades at a time, to building something completely new.


Or in the words of Peter Thiel the founder of PayPal and famous Silicon Valley investor instead of going from one to many, we need to go from zero to one.


So we don’t need to keep improving the one product we have with many little innovations.

We need to build the one thing that changes everything in a place where there has been nothing before.


Let me give you an example.

Last summer I went hiking with my wife north of New York in the Catskill mountains and I stumbled upon some old ruins next to a lake. They looked like a huge abandoned factory in the midst of nowhere.


What on earth was this? Who built such a huge structure so far away from any bigger city?

I did some research and found out that at the turn of the 20th century, it was big business to cut ice out of frozen lakes into huge blocks, store it till spring in big warehouses and then transport it to New York and sell it so that the people in the city could get a cool drink in summer.


One company in 1900 bought the rights to cut ice from a lake until 1999 but went out of business just 4 years later when the first industrial ice factories opened in New York City.

And they, in turn, went out of business shortly after and were replaced by the refrigerator.

None of the companies led the changes or disruption of their Industry and all of them died.


All of them spent lots of money and thought on how to make their existing product better and the production more efficient none of them thought about what could replace them.

So why is it so hard to truly innovate and come up with a solution that will stop climate change, eradicates cancer or makes us incredibly rich?


There are 6 things that combined reduce our innovative capacity by over 90%

  1. Neurological short cuts

  2. Learned behavior

  3. Lack of passion

  4. Our previous success

  5. Linear thinking

  6. Trend blindness


1 Neurological short cuts

All of us know what a paper clip is and what it looks like.

Let’s play a game. Try to come up with things you could do with a paper clip you had 60 seconds.


If you are as smart as most of us, you now came up with around 10 ideas on what else, than clipping paper, you could do with a paper clip.


Research showed that a kindergarten child on average comes up with over 20 times as many ideas on what to do with a paper clip than grow-ups. That’s 200 new use cases for a century old product.


Why is that so?

As an adult, our intelligence grows. I assume everybody agrees with me on this.

At the same time our raw creativity declines.

And the reason for this is that over time we learn shortcuts to reduce complexity and load for processing.


Shortcuts to reduce complexity

  • Proximity

  • Similarity

  • Continuity

  • Simplicity

  • Symmetry

  • Common fate


All that limits the outcome of our creativity to roughly 10% of the potential amount of ideas we could have. That is excellent if you have to come up with a quick idea of what that strange noise is at night in the savanna in order to protect yourself from the lion, but it is absolutely terrible when it comes to finding new ideas.


In order to overcome this obstacle, we need some methods.

  • Reset your expectations

  • Kill your ego

  • Throw away your first ideas

  • Use patterns & megatrends

  • Dive into your own curiosity


One question you could ask in a workshop could be:

  • What innovation could kill my project, my company or the idea I am working on right now?

  • Or if you start from scratch trying to find out what technology to invent next, ask:

  • What could kill the market-leading company or product in my field of expertise?


2 Learned behavior

Over time we learn that a lot of things don’t work, are not allowed, should not be done or are just not feasible. It starts when we learn that Santa Claus is not real, that we cannot fly like a bird and that it is hard to earn money.


We are restricted by

  • Rules

  • Policies

  • Procedures

  • Structure

  • Compliance

  • Standards


“Boardrooms and meetings are filled with people who built their careers by challenging ideas and showing you what’s wrong.” Billy Hayden, CSO Universal Orlando Florida


All that limits our capability to imagine what could be.


You are much closer to the next big thing than you believe.


But to get there you need to be open to new possibilities and

  • Encourage play

  • Ask questions and stop knowing the answer

  • Assume you are incorrect

  • Break the rules and standards

  • Diversify your team


3 The lack of passion!

Too many people sit in meetings because it makes them look busy, they feel important and don’t need to actually work. And on top, they get free coffee and meeting cookies.

At the same time too many people try to innovate for the wrong reason. Innovation is so hard and most of the time so frustrating and gives you so many setbacks that if you don’t have an inherent passion for the topic, the technology or the problem you are trying to solve you will fail. You will give up too early, you will go with a mediocre solution or you will just not come up with anything useful.


Making money, becoming famous or publishing a paper is not enough.


Good questions to ask to avoid the passion problem are:

  • Would I work on finding a solution to this specific problem even if I didn’t have to?

  • Would I give up a substantial portion of my income or my time to pursue this idea?

  • Do I know someone who could do it better than I can?


If you answer the first two with yes and the second with no - keep going.

If not, search for a problem or idea that fits you better, that triggers your curiosity and meets your expectations. And if you don’t find one, help someone who has a problem to solve or an idea to pursue he/she is passionate about. By helping someone else realize an idea he or she is passionate about you will make a bigger impact than working on your own idea without passion.


4 The Manager syndrome or how previous success slows innovation down.

As mentioned previously we are hardwired and are evolutionarily trained to stick to what worked for last year’s harvest.


Perfect examples for this are

  • Kodak who invented the digital camera in 1975 but never brought it to market.

  • Blackberry who invented the smartphone but got replaced by the iPhone and Android.

  • And Blockbuster who experimented multiple times with downloads and had the chance to buy Netflix 3 times before going bankrupt.


These are pretty good examples of what happens when you have a good idea but don’t understand the future potential the idea has.


What we can learn from this and all the other failed formerly super successful companies is that we are farmers who repeat what worked before, instead of disrupting ourselves.


The Kodak management was afraid of losing their film business.


Blackberry was too greedy and wanted it all for themselves and therefore didn’t allow third-party applications until it was too late


And Blockbuster was too arrogant and believed that nobody could ever challenge them because they are the unchallenged number one in video rental.


The reason they all failed was that the management had too much to loose and got afraid of taking risks. If you made it to team lead, a middle management position or even to the C-level you’ve achieved a lot. You probably didn’t make too many mistakes and you survived multiple attacks from colleagues trying to get your chair. And you made it to a position where you get a much bigger salary than most of your colleges and don’t have to work as hard as they do.


Why on earth should you risk all of that for a bogus idea that might come to fruition in 2, 5 or even 10 years?


So what you do is you stick with what worked to get you where you are and what is a safe bet.


To overcome this the organization needs to:

  • Encourage risk

  • Accept failure as an integral part of innovation and running the organization.

  • And have the will to destroy the status quo.


And that has to be lived every day on all levels. It doesn’t help if you write it in your mission statement but if someone takes a risk and fails you cut his team or reduce her budget.


5 Linear thinking

We are very good at forecasting next week, the next month and the next year.

I can predict with a 99% chance that in September 2020 Apple will release its next smartphone and it will have 5G, a new and better camera and it will have the same dimensions as the one we saw in 2019.


The reason we are so good at forecasting something like the next iPhone or anything else that will happen in the near future is that we are very good at linear thinking.


If we have a starting point and linear increments of change, we know where something will be at a given time.


But people are terrible at predicting things that are 3 to 5 or even 10 years in the future.

And the reason for us being so bad at predicting the future is because innovation isn’t linear.


Innovation is exponential.


There are many examples out there like transportation for instance.

From the horse carriage to the first automobiles it took us centuries. To cars becoming an everyday thing after the second world war only 50 years and before the end of the 21st century it became a commodity.

And in a few years we might not need our own car at all thanks to Uber like autonomous car fleets or flying taxis.


If you look at how humans evolved in the last century you find a pattern.

The time for progress shrinks dramatically as time goes by.


And that makes it harder for us to predict the future and at the same time speeds everything up around us.


If we understand the intervals of change we would be better at predicting opportunities, better at creating urgency and change (which would help us a lot with solving climate change) and be more likely to convince our teams, our boss or investor and all other stakeholders.


The intervals of change are 50,40,15,10,7,3


What takes us 50 years today will then take us only 40 and what took us 40 will only take us another 15 to achieve and in the 10 years after that we will again achieve the same innovation gain as in the 15 years before and then 10 and then 7. And if we want to know what we can achieve in the next 3 years we can expect the same level of advancement that humanity experienced in the time from the roaring 1920es til the flower power 1970.


Or to bring it more closely to home.

These are the ten most important inventions since 2010 according to INC.com

1. ​Google Assistant

2. Crispr

3. SpaceX's Reusable Rocket

4. ​Venmo

5. Nest Thermostat

6. iPad

7. The ​Self-Driving Car

8. Consumer LED Light Bulb

9. Ring Doorbell

10. ​Tesla Powerwall


Nothing of that was imaginable for most of us in 2009. And what will be invented in the next 5 years will be at least as mind boggling as the list above.


That means that electric self-flying taxis are actually a real possibility by 2025.


Google and others proved that you can have autonomous vehicles that handle complex environments and Tesla proved that you can store enough energy in a battery to drive a car on a single charge more than 300 miles.

If you combine these two and take the acceleration of innovation into account - flying electric robot taxis becomes pretty realistic by 2025.


In order to overcome the limits of linear thinking you need to

  • Track the amount of change in your field

  • Combine it with the acceleration of innovation

  • Prepare scenarios that will disrupt what you are doing today.

  • Imagine the future you want

Everyone knows the song “que será será”, The future's not ours to see. That’s wrong, we are forming our future every day. But if we want a future we like, we need to be able to imagine this future. If we don´t dream up the future we want we cannot build it.


6 Trend prediction

I kept this until the end because it’s by far the hardest and I'm hoping everybody is asleep by now.


All of you have heard the famous phrase:


Predictions are difficult, especially if they concern the future. (Niels Bohr)


And that is right. but nonetheless we need predictions about the future to make useful decisions today.


First of all, you need to understand what will stay the same.

I know that sounds like I am contradicting myself. But that’s not the case.


So this is what will stay the same:

  • Everything will change. If there is one thing we know for sure it is that tomorrow nothing will be as it was today.

  • Humans will be humans. It took us millions of years to learn how to walk on two legs. We will not grow wings in the next 5 years. And the same thing is true for the basic needs of the Homo Sapiens. We need food, we need human interaction of some kind, we want to have sex, we are lazy, we want to live as long as possible and we want to be entertained.


There are such constants for every industry.

The difficulty is to identify them without making the mistake of ignoring possible technological innovations.


For the communication industry, for instance, the only thing that stays the same is that people will always want to communicate.


And I know what I am talking about, as 5 of the 13 companies I founded were telecom companies.


144 years ago telegraph companies for instance knew that people wanted to communicate, which was what made them rich. But they didn't believe that the telephone was an invention people could need or even want.


Their business was growing, they thought sending telegrams was the big trend so they kept investing in better telegraph technology and more and longer telegraph lines.

They confused the growth of their business with the actual trend. The trend wasn’t that people had a growing interest in sending telegrams.


The trend was that people were broadening their horizons and their business and their social contacts. They started doing business regularly with people that lived further away and had relatives that not only lived in the next village but in the next city, state or country.

The trend was geographically expanding contacts, businesses and relations.

The constant was that people want to communicate.


And if you look at these two parameters you can predict the future.

And so could have the telegraph companies when Bell first asked them to help him bring the telephone to market.


You might not be able to name the product or the technology we will be using in 20 years from now to communicate, but you can predict what technologies could make communication easier for us and you can thereby better predict if a technology you see actually has potential or not.


Final note

Innovation is difficult, but with the right mindset, knowing that we have to overcome some internal and external obstacles and by using the right tools we can be incredibly innovative.

The tools we have today to speed up product iterations, the vast amount of knowledge we can access at our fingertips and the communication infrastructure that lets us cooperate with the smartest minds all over the world from our desktop or laboratory without the need of stressful and time consuming travel, enables us to innovate at a speed never seen before.


We are living in truly remarkable times, full of opportunities no human being has ever experienced before.


Let's start innovating and solve some problems!


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