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Reid Hoffman, a co-founder of LinkedIn and now partner at venture capital firm Greylock Partners, says innovators must ignore hype to identify new technologies with real traction. It starts by envisioning how they might shape the future.
HBR editor in chief Adi Ignatius sat down with Hoffman in this episode of our video series “The New World of Work” to talk about:
- Transforming today’s volatility into an opportunity for truly beneficial innovation
- The role of talent as the true differentiator for companies
- How leaders can amplify their social impact by aligning it with their business’s mission.
Leaders prove themselves not when things are easy, Hoffman says. “Saying, ‘We believe in excellence,’ or, ‘We believe in shareholder returns’” is OK, he says, but you don’t tend to get criticism for those. “It’s the places where you have to make a decision in some areas of difficulty, that’s when true leadership is actually shown and demonstrated.”
“The New World of Work” explores how top-tier executives see the future and how their companies are trying to set themselves up for success. Each week, Ignatius interviews a top leader on LinkedIn Live — previous interviews included Microsoft CEO Satya Nadella and former PepsiCo CEO Indra Nooryi. He also shares an inside look at these conversations —and solicits questions for future discussions — in a newsletter just for HBR subscribers. If you’re a subscriber, you can sign up here.
ADI IGNATIUS: Reid, welcome to the show.
REID HOFFMAN: Awesome to be here. Great to see you.
ADI IGNATIUS: So how does it feel appearing on the platform that you yourself created? I mean, this is probably the definition of a metaverse.
REID HOFFMAN: Well, it is a definition of a metaverse insofar as people are like, “Oh, this metaverse is a new thing.” But we’ve already experienced it. We’ve already been in it. The internet is a form of the metaverse. StreamYard and Teams and Zoom are part of the metaverse. So, we’re actually in the metaverse.
ADI IGNATIUS: Just for people who are wrestling with the definition of metaverse, this is actually not the metaverse. This is meta, but it’s not metaverse. But maybe we’ll talk more about the metaverse and possibilities, because I know we’ve already gotten some audience questions about that.
A lot of the questions that I have and that people who are watching have are about innovation. You’ve been involved in a number of companies that have been super creative, super innovative and have scaled. You’ve written the book about how to scale. Tell us something about innovation that we don’t know that might be of use to our audience.
REID HOFFMAN: Always a great question. It’s kind of, where is the unique thing? Let me start with something that probably a number of people know, but then move to maybe things that are a little bit more esoteric, or more subtle.
The first one is: There is no innovation without risk. Frequently what happens in these kind of things is I’ll take an innovation and it’ll just work. Obviously, there’s ways you try to be innovative in risk-intelligent ways. You try to maximize the chance that it will work. You try to minimize the cost of it not working. You try to have some things where if it didn’t work, it still works in some viable way.
But literally, if you’re trying to be innovative and you don’t see the risk in what you’re doing, either you’re not being innovative, you’re being blind to the risk, or maybe it’s just not that interesting. So that’s one.
Now, the more subtle ways of thinking about innovation are like, OK, so which innovations may have an interesting chance to work? This is actually one of the things where you have to intersect a number of different things.
So typically, of course, again, people will think, “Hey, what are the platform changes? Is it metaverse change? Is it an AI change? Is it a cloud change? Is it the ongoing mobile change? How does that lead to what the changes are and the thing that I’m working in? How does that play to our product or service? How does that play to our supply chain? Or how does that play to how do we work?” Then asking a whole set of questions around these things are generally how you can lead to innovations.
But then you want to begin to say, “OK, it’s this combination of, yes, I’ve got a good idea. I might be adjusting to a meme that people are talking about, but I’m also thinking in concrete terms about how does our product or service work? How does our company work?” Because you could say, well, like metaverse is a very common one, people being clear about what is that metaverse? So is it, oh, we’re all going to be in body suits with a head camera and that’s how everything’s going to work now and it’s going to be all like “Ready Player One”?
I think once you begin to really think about that, you realize that that future is not near-term to us, and that actually, in fact, the more interesting thing when you’re looking at patterns of innovation is what’s happening in the next three, five, 10 years. Thinking about timeframes is actually really important, timeframes for when is this platform change happening, timeframes in how can you execute on things, and what is that intersection?
If you’re not throwing out some of your good ideas, then you’re probably also not being discerning enough to say, “OK, yeah, I had this really good idea about how to use video, but it doesn’t really fit within the timeframes and so I’m going to do something else.” So, anyway, I’m happy to go in depth in any of these, but those are some Jackson Pollocking, throwing paint on a canvas on innovation.
ADI IGNATIUS: Those are all great points. Actually, there’s an audience question that really builds on this. I’m going to go to that right away. This is from Alex in London: How do you scale innovation, where the profitability of your legacy products can get in the way of innovation and R&D?
REID HOFFMAN: It’s a classic problem. Obviously, the innovator’s dilemma is usually the way this is historically described, Clay Christensen. The short answer is, it takes some leadership and it takes some grit. Usually, what you want to be able to do is say, “Hey, if we’re going to be innovatively disruptive, we want to do it to ourselves.” So you start doing that process.
You’ll get organizational tension because your whole organization will be around your legacy product. You’ll still be in a place where you can say, “Businesses are about tuning efficiency.” So that’s part of the reason why you have HBR and you have business schools always like, how do you reliably put in a dollar and get out $2 or $5? It’s like the legacy business will clearly do that.
Whereas the new thing is like, well, wait a minute. Are we taking that away? Are we destroying ourselves? Would someone else do it if we didn’t do it? The answer is, you have to start trying to do it. It’s the reason that one practice of companies in Silicon Valley is, you always do some red teaming. You always say, “How would an innovator come after us? OK, can we experiment with that? Can we own that channel? Can we be doing whatever the disruption is, the platform, the lower cost of product or service?”
Because the innovator’s dilemma of Clay Christensen was classically studied very much on hard drives and cost of that, and we’d be doing that and making that happen. But without leadership, that can’t happen. The leadership ultimately comes from the CEO and the executives who say, “We need to be doing this.” A lot of times, unfortunately, this is when leaders are like, “Well, if I don’t have to do this innovation and I can hand it off to the next generation,” that’s frequently where companies can get into trouble, because they haven’t been taking the risks and making the efforts on the new products.
ADI IGNATIUS: So I’m going to do one more innovation question. You’re the innovation guy. This is from Steve in Brooklyn. It’s really about innovation opportunities that have maybe been creat