corporate culture Archives

61 Rules for a Culture of Innovation

Posted on September 8, 2013September 20, 2026 by John Hannon

How do you structure a corporation for innovation? There are many answers to this question, which vary depending on the size and purpose of the organization. However, if any company can claim to be a model for innovation in the past decade it has been Google. Not only has the company brought innovative products to market such as Gmail, Google Maps and the Android operating system, but also its open business model and culture challenge many assumptions of a more traditional, 20th century corporation. One person responsible for much of this innovative business model and culture is Jonathan Rosenberg. Jonathan was VP of Product Development at Google, and was responsible for much of the culture that yielded these innovative products. (He still is a Google employee.) In 2010 Jonathan presented a talk to his alma mater about the lessons he has learned as a manager. In the talk he outlined 61 rules for success. What you realize reading the list is that even though only six of the rules are explicitly focused on innovation, many of the others are important catalysts to the innovation process and helped make Google the effective company it is. The talk is useful, and has become a key reference point for founding my own corporation, Justkul Inc. Because an online video is not the easiest format to access individual rules, I decided to make a list of the rules he outlines in that video. In keeping with Jonathan’s emphasis on open innovation, I thought it would be useful to share the list here. Keep in mind that what follows is my version of Jonathan’s rules, and I make no claims that Jonathan would endorse this outline, or that I have captured every one of his rules correctly. You’ll have to watch his talk to decide. The list below is also no substitute for the actual talk, which supplements the rules with very useful and entertaining commentary and stories. I include some commentary of my own in italics in the post. If you would like to comment further, feel free to do so. I’d be particularly interested in any experiences you’ve had following or not following these rules, and what additional rules have been important for running your own innovative corporation.

Communication, 9 Rules

Over-communicate in all ways all the time.

This is true, provided that actual communication is happening. Never take a lot of time in order to say very little.

Openly share everything with your colleagues.

Some caveats are obviously necessary here. The point is to share things that are actually useful for colleagues. Sharing such information not only gives a company a competitive advantage, but can enhance the connections between team members. This last fact is important, because if it is implemented incorrectly and does not foster these team connections, it can lead to a stifling, ineffective organization.

“Repetition does not spoil the prayer.”
Each word matters. Remember Blaise Pascal’s dictum: “If I had more time, I would have written a shorter letter.”
Great leaders are great teachers, and great teachers are great storytellers. Narrative is how we learn.
As leaders you learn more by listening than talking. “When you listen, you learn how things work as opposed to how you think they work.”
If you must talk, ask questions. People learn more from your questions than your answers.
If you actually know the answer in a business situation, stop listening and by all means talk. However, show what you mean through data.
Strive to respond to emails instantly. A manager is nothing but an expensive router, be a good one. Always ask, “Who needs to know this?”

I know people who have had great success following the rule of responding to e-mails immediately, but it doesn’t necessarily work for everyone, especially people engaged in work that requires concentration. Also, as Sandra Bond Chapman has discussed in her Forbes Next Avenue post, there are real risks associated with the multitasking mindset that results if one is constantly responding to e-mails. Personally, I would much rather have people take advice from Blaise Pascal’s dictum above, and take a little extra time to ensure communication is shorter and more efficient. However, the question “Who needs to know this?” should always be asked. If some people may or may not need to know it, thenGrexit offers a nice app for that.

Company Culture, 16 rules

Avoid hippos (“Highest paid person’s opinions”).
You shouldn’t be able to figure out the pecking order of org chart by looking at the product.
Help organizations crush bureaucracy in all its forms. Dying organizations foment it.
When you are trying to accomplish something ask for a winning strategy AND the tactics needed to win.

Our variant of this is whenever we come up with a good idea, we always try to also ask what are the first few steps to implement it. It is always useful to take an idea one step further than you need to at any given moment on the path to implementation.

People are more productive when they are crowded.

This is not always true. Susan Cain’s provides a fairly good defense of the need not be be crowded in her TED talk about introverts

Empower the smallest of teams.
Working from home is a malignant metastasizing cancer. Ban it.

Given her recent actions at Yahoo, you can tell Marissa Meyer worked for the same company as Jonathan from this rule. Marissa qualified her response in light of the backlash it generated, but Jonathan appears to hold an even stronger version of the position. There are good reasons to have people in the office, especially given the importance of serendipitous interactions for innovation and the importance of co-location for agile workflow. However, I think that time away from the office can be equally valuable, not just for work-life balance, but also because it can promote other useful serendipities.

Engineers and product managers add complexity. Marketing adds management layers. Sales adds coordinators. Manage this.
“Knights are knights and knaves are knaves.”
Once someone reveals himself to be a liar, he is a liar.

In my experience context can force even honest people to lie. Philosophy abounds with examples of these cases. Design and manage a company in such a way that you these contexts do not happen.

Trust, but verify.

My favorite version is the Persian proverb, “Trust in God, but tie your camel tight.”

Focus on values rather than costs. In business more revenue solves all your problem. Use the 80/20 rule to determine what to focus on.

Good advice in general contexts, but one should add the exception famously identified by Clayton Christensen: in contexts of disruptive innovation following the 80/20 rule can sometimes lead a company astray. Fortunately, Google has a great antidote for this: the fact that employees can spend 20% of their time working on projects of their own design.

Never suggest copying a competitor.
Hope is not a plan.
Success breeds the green-eyed monster. Take away its key weapon, surprise; fight it with its kryptonite, humility.
Do all reorganization in a day.

Hiring and Development, 14 Rules

Know how to interview well.
Great people make a great company, which in turn attracts great people.
Managers don’t hire people, hiring committees should hire people.
Promotions should be a peer review process.
Don’t hire specialists.

This resonates with me, because so many companies seem obsessed with specialists now. For a lot of companies the situation is even more extreme: it’s not just that a company wants a Python programmer, but now it has to be a Python programmer with five years’ worth of experience who also knows how to do statistics in R who lives in Houston, and has led a team for 3 years (not 2 or not 4), and so on. If you define the parameters stringently enough, soon there will be no one who could possibly fulfill them. Equally important, it prioritizes proxies that have little correlation with performance over actual performance. Basically, most hiring processes are broken, and the current reliance on algorithms and big data may even make it worse. See the excellent post by Nick Corcodilos

You cannot teach passion.
Urgency of the role isn’t sufficiently important to compromise quality of hiring.
Identify bad eggs.
Get rid of bad eggs.
Diversity is your best defense against myopia.
You can’t punt the management training program.
Life is not fair; don’t try to make it fair. Disproportionately reward risk-takers and performers.
If you are going to pay Alex Rodriguez $33 million a year, feed him the ball. Build around people who have the most impact.
The best way to get rid of bad eggs is penguin-pecking.

I’m not sure I agree with this point. I know this approach is common in many legal firms, but sometimes a transparent direct conversation has value too. Equally important is taking extra steps to ensure the process is as painless for everyone involved as possible. All the consulting firms know that ex-employees make for future clients, so it is worth ensuring that no bridges will be burned. I also like firms that take creative approaches to this, such as how ?WhatIf! Innovation apparently provided job placement and detailed letters of recommendations when employees were forced to leave Decision-Making, 6 rules

Decision making is about consensus, not unanimity.
There is no consensus without dissent.
If there is doubt about what to do, consider your customer’s perspective.
Choose your goals wisely.
None of us are as smart as all of us.
Where there is harmony, there is no innovation. Innovation comes from disagreement, not from harmony.

Fostering Innovation, 6 rules

Most companies manage creativity in order to manage risk. Don’t do this.
Innovation comes from creativity. Creativity cannot be managed. It can be allocated, budgeted, measured, tracked, encouraged, but it can’t be dictated.
Create a culture of yes, based on optimism and big thinking.
Never stop someone from moving forward with a good idea because you have a better one.
A leader’s job is not to prevent risk, but to build the capability to recover when failures occur. A good failure happens quickly and provides many lessons. A bad failure takes a long time and you don’t learn anything.
A good crisis is a terrible thing to waste.

Humility, 10 rules

Learn something new so you can remember how hard it is to learn. Teach something so you can learn.
Never stop learning.
Humility is correlated with age. Arrogance is inversely correlated with age.
You get personal leverage through empowerment, delegation and inspection.
Judgment comes from experience, and experience comes from errors. Publish post-mortems when something fails.
Smart people can smell hypocrisy. Culture is set from the top, and once set it cannot be changed.
Don’t burn bridges.
Always ask yourself, would you work for yourself?
Write a self-review and be critical about yourself. Do this every year.
Communicate, confess, comply.

Jonathan emphasizes at the end of the talk that people should make their own lists and not simply follow his rules verbatim. However, I think Jonathan’s list is a fantastic place to start. Let us know what you think.

By @jfhannon, CEO at Justkul Inc., a research firm focused on the needs of strategy and private equity.

Failing for Success: The Importance of Low-Fidelity Prototypes

Posted on March 4, 2013November 30, 2015 by John Hannon

Many of the strategic issues we’ve been thinking about at Justkul Inc. revolve around the intersection between design-thinking and corporate strategy. Although we believe both can be compatible, they are often in tension with one another. One of our hopes is to bring both fields closer together.

One concept about which many design thinkers are seemingly at odds with corporate strategists has to do with failure. Business strategy often ruthlessly avoids failure. Yet, in many cases, “failure” can be good and should be strategically incorporated into business processes. I say “strategically,” because not all failures are the same, and recognizing this point can have a profound impact on innovation.

To understand the importance of this point, it is worth keeping in mind how large corporations succeed. Corporations do this primarily by developing reliable processes that can be replicated through time while avoiding failure. Some industries, such as the automotive industry and manufacturing aim at six sigma accuracy, which is typically defined as less than 3.4 mistakes per million products. When you consider that individual products can have hundreds if not billions of components (think computer chips), to even come close to achieving this level of accuracy is an amazing accomplishment, and requires not only technological innovation, but also corporate cultures that are committed to the goal of avoiding failure.

Yet, even though many mature companies aim for that level of accuracy in some processes, it can be detrimental to other processes. For instance, any firm that is developing a new innovative product should generally not aim for perfection in the beginning of the product’s development, but should rather aim for rough prototypes that test the fundamental ideas first. This is because the process of developing a revolutionary new product often requires a great deal of failure. At an opposite extreme to six sigma accuracy consider the famous 5,127 prototypes that James Dyson made before he finally hit upon his famous vacuum. If you want to look at this design process using the same scale as a six sigma process, instead of 3.4 failures per million, that would be a failure rate of about 999,800 per million, or 294,000 times an acceptable six sigma rate! No large corporation would survive if it had that kind of failure rate in one of its key replicable processes.

However, Dyson’s “failures” were of a very different sort than the failures that prevent a company from achieving six sigma accuracy. They may have been failures so far as they failed to manifest the final successful product, but successes so far as they were important steps along the way. Thomas Edison encapsulated this thought well: “If I find 10,000 ways something won’t work, I haven’t failed. I am not discouraged, because every wrong attempt discarded is another step forward.” Dyson and Edison’s “failures” reflect the very nature of the process of innovation.

Most companies have come to recognize this truth in some form, and the phrase, “fail early, fail fast, and fail often,” has become a mantra for R&D. Consequently, management is usually willing to tolerate a certain degree of “failure” from their R&D departments, and to understand that the same metrics cannot be applied there as in other parts of the corporation. However, being tolerant of failure often doesn’t go far enough. There are circumstances in which failing to produce a perfect, compelling product should not only be tolerated, but encouraged.

Aiming for Imperfection

Imperfection should not only be tolerated, but encouraged in the early stages of product development. In these circumstances, striving to produce too perfect a prototype can lead to significant failures later on.

To see this, note that any prototype of a product will succeed in some ways and fail in others. In one extreme let’s imagine the 5,126th prototype of Dyson’s vacuum cleaner. I have no idea what the product looked like, but given the late stage in the development, I imagine that it was very close to the final product. It had high fidelity in relation to the final product. When Dyson was evaluating such a product, most of the details were likely working satisfactorily, but there may have been one or two things that were off: perhaps the color or the texture of a surface material, perhaps there was a defect in the motor that needed to be fixed. But I hazard to guess that at this stage of development 99% of the product was in its final form and functioning correctly.

Again, I have no idea precisely what Dyson prototype #1 looked like, but given the nature of innovation, I would be inclined to imagine it was very different from the final product. It had low fidelity in relation to the final product. It probably did not match the final product in shape, color, size or even function. It might have even been made out of cardboard or drawn on paper.

The level of fidelity of a prototype is important because it is directly related to the type of feedback one will receive. If a potential purchaser of a Dyson vacuum cleaner were shown prototype 5,126, that person might decide to buy it on the basis of its color, regardless of what functional innovations it incorporated. The product just looked nice. In contrast, a viewer of prototype #1, whatever that looked like, would probably not be distracted by the color. In fact, it would be pointless to ask about color at that stage, because color preferences will likely change as other important factors changed.

If the goal is to receive feedback on fundamental concepts, then there is no need to produce a finished model. In fact, the finished model with all its polish and beauty can be a distraction from the intended evaluation. Hence, for a very interesting reason, one should not aim to produce perfect and beautiful prototypes early on in a design process: they can be distractions from the basic innovations that one wants to evaluate.

Not just a Concept for R & D

The same principle holds in areas far removed from product development, and this concept can be carried over into all aspects of business and life. For instance, the broad outlines of a new business strategy might be evaluated incorrectly if it is initially packaged too well. A hiring process might not be optimized if a job candidate is expected to perform too well on an initial interview. An initial brainstorming session is often less productive if there is an expectation for too refined a result. And as I will explain in a future post, one will learn things more slowly if one doesn’t provide adequate space for failure.

Everyone wants to have their ideas succeed. Corporate culture only reinforces this inclination whether you are in a six sigma operation or a less than one sigma one. The fact that beautiful prototypes can succeed more often than ugly ones, that quantitatively validated ideas can succeed more than those that are more nebulous, encourages us to adopt certain strategies. But when it comes to early stages of a product’s or an idea’s development, this in itself can be a mistake. Fail early not only because it is better to get such failures out of the way in the beginning, but also because it may be the only way to ensure products will succeed in the end.

By @jfhannon, CEO at Justkul Inc., a research firm focused on the needs of strategy and private equity. This post and the concept of fidelity were inspired by an excellent talk I attended by Anijo Matthew (@anijomathew) on 2/13/2013.

Thoughts on Reading Sticky Wisdom

Posted on April 17, 2011November 30, 2015 by John Hannon

For Creativity and Innovation Week (April 15th-21st) I’ve decided to write something about a book that has recently had an impact on how I think about creativity. This is Sticky Wisdom: How to Start a Creative Revolution at Work. The book is relatively short, and can be finished in about a day. It has a number of interesting examples of creativity, and offers a framework for thinking about creativity and innovation.

The part of the book that I found most useful is the distinction between analytical and creative thinking and the importance of signaling when one is changing from the one to the other. I just defended a dissertation in analytical philosophy, so I am probably the poster-child for analytical thinking: whether it’s ancient mathematical proofs, Gödel’s incompleteness theorem, or applying skepticism to any proposition (“Do I exist?”—”Not entirely clear.”), I’ve done it. “Analysis” means breaking down a proposition into its component parts, and comes from the Greek word for loosening or untying a difficult problem. Analysis is not necessarily the opposite of creativity: it can take considerable freshness of thinking to be able to see the assumptions upon which an approach or statement is based. But there are contexts in which it can definitely be in tension with creativity.

This is often the case in a business context. Businesses are incredibly analysis-based. This is in part because of the complex types of problems that corporations face. A successful launch of a product in a new country depends on getting hundreds of details right, whether it’s understanding the customers, determining how to distribute the product, identifying costs, coming up with effective branding, and so on. If any one of these things goes wrong the launch could be a disaster. This is perhaps the reason why analysis is so central to MBA education, and why corporations and consulting firms can be obsessed with it in the interviewing process. But the analysis focus goes even deeper than this: most corporations are obsessed with risk management. There are people whose only jobs are to avoid risk, committees and boards are designed to distribute risk, jobs are reduced to such tiny pigeonholes that no one can cause too much damage, and at the top there is a CEO who’s job it is to never say anything that will risk the company’s reputation. Hence, when a new idea is proposed, the default setting for most people is, “What could go wrong with this? What are the risks if we do this?” Yet, although these are necessary questions to ask in some contexts, they can be inimical to truly creative and disruptive ideas that no one has thought of yet. This is because—by their very definition—such disruptive ideas are risky.

Hence, in Sticky Wisdom the authors argue that it is important to set aside space for another mindset. They call this “greenhousing,” and it can be roughly described as a context in which risky ideas are not only allowed to grow, but are in fact encouraged to do so. This is particularly important in the early stages of an idea, before it has had a chance to be worked out in any detail. As Sticky Wisdom emphasizes, at these stages a simple, “Yes, but . . .” or “We’ve tried that before,” could be enough to kill a potentially exciting and innovative idea. What one really needs is a context in which even an initially ridiculous idea can be explored. As I have said in an earlier post, I sometimes have started a brainstorming session with the question, “What’s the most ridiculous way to solve this problem?,” and have been surprised at how much insight can be gained in approaching a problem in this way. But given the focus on analytical thought in a corporation or in academia, you have to often make a point to signal when you are looking for growth-support rather than criticism.

The advantages of having an organization occasionally adopt this mindset are manifold: new opportunities can be identified, and genuinely innovative approaches to problems can be found. One might even argue that it is not accidental that many of the most influential technologies and innovations arise outside of a corporate setting: whether it be Twitter, Facebook or Google, small entrepreneurial groups can be more willing to take risks because they have less to lose if the idea doesn’t work out, and are often more willing to be creative. When large corporations are not at least sometimes willing to take similar risks, they create risks of their own, including the risk of missing the next trend in innovation. And the funny thing is that large companies don’t necessarily have to miss that boat: if a corporation provides contexts in which employees are encouraged to think creatively, they too can have the insight to come up with similarly innovative solutions. But this takes more than a mission statement about the importance of innovation, but a genuinely new way of looking at the world. Sticky Wisdom offers insights on how to look at the world in this way.

I hope in honor of Creativity and Innovation Week and Leonardo da Vinci’s birthday companies, schools and organizations set aside some time to think about creativity. Having the staff reading Sticky Wisdom can be a good start.

By @jfhannon, CEO at Justkul Inc., a research firm focused on the needs of strategy and private equity.