Skunkworks: Protecting Innovation
Skunkworks: Protecting Innovation
Note for readers: This an excerpt that was originally drafted for my book – Unstuck. It’s a longer read, but trust me, it’s worth it!
Skunkworks? Seriously?!
Hey, that term has a long, proud history in American culture and business. In the depths of the Great Depression, Americans could count on a daily dose of humor from the denizens of Dogpatch, Kentucky, in the Li’l Abner comic strips from the satirical pen of Al Capp. His seemingly ignorant back-woods folks turned out to be a whole lot smarter than most “city slickers”—sometimes out of noble motives and occasionally to try to make a quick buck. Among the scoundrels were the Barnsmell brothers, home-spun entrepreneurs who took over a dilapidated factory on the edge of town and cloaked their skullduggery with toxic fumes. The brothers specialized in producing “skonk oil” through a foul process that involved old shoes and dead skunks. No one was ever quite sure of their recipe—or the exact nature of their product—because no one dared to set foot inside their Skonk Works for fear of the overwhelming smog that surrounded it.
That was all very funny, until the term was adopted for a life-and-death project. In December 1941, the U.S. officially entered World War II and, by early 1943, the U.S. Army Air Force realized that it desperately needed a jet fighter to keep up with German technological advances. Too many Americans were dying because they were outgunned by these powerful Nazi planes. Lockheed was asked to make a proposal for a sleek new American jet built around the design of a new British engine. Contracts took until the autumn of 1943 to be finalized, but Lockheed’s Clarence L. “Kelly” Johnson and his colleagues already had started work in a secret facility they dubbed the Skunk Works as a humorous salute to Al Capp’s idea. The team designed and built the XP-80 jet in 143 days—a speed no one thought possible. The concept was a huge hit and Lockheed kept it rolling. In the 1950s, for example, the Lockheed Skunk Works developed the famous U-2 spy plane.
One hallmark of the Skunk Works concept was permission to start a project even before completing cumbersome legal and regulatory processes—sometimes starting with little more than a verbal agreement and a handshake. Another rule was strict secrecy from anyone who was not essential to the project at hand. That privacy was easy to maintain at Lockheed’s original Skunk Works, partly because it was located near an especially foul-smelling plastics plant. Lockheed became so proud of this record for innovation that the company retold the Skunk Works story in its promotional literature for many years. When a copyright issue was raised by Al Capp’s newspaper syndicate, Lockheed settled by trademarking a different spelling: Skunk Works as two words with capital letters.
That may be why authors like Vijay Govindarajan avoid the term entirely when describing this strategy for driving innovation by deploying small pilot projects. But—seriously—executives who know how to roll up their sleeves and cut some red tape to unleash our best pioneers still love Al Capp’s humor.
There’s still a lot of value in a potent li’l skunkworks.
That is, if we deploy one properly.
The Cautionary Tale: A Skunkworks, a Mouse and a Pirate
The most popular skunkworks story in the annals of American business actually keeps changing with each passing year. Business schools once told the story about Steve Jobs stealing the secrets of XEROX’s skunkworks in 1979 as a Shakespearean tragedy. In this version, the story became an example of a big old company failing to recognize that it held the keys to unlock the future—and, instead, letting a ruthless upstart swipe the crown jewels. In 1999, that’s how the tale was told in the Hollywood movie Pirates of Silicon Valley about the birth of Microsoft and Apple.
Then, in 2011, Malcolm Gladwell rewrote that story about Jobs’ 1979 peek inside XEROX’s research center in a long investigative story for The New Yorker. In reality, Gladwell argued, XEROX had been far smarter than anyone thought at the time. Their secretive research center in California was designed to give free rein to geniuses to conduct research on new products. Along the way, they had invented much of what we now regard as the essentials of personal computing—but that was not their core mission. XEROX’s future lay in imaging, not personal computers. The research center had, indeed, produced a bumper crop of revenue for the company’s core business. Sure, Jobs swiped some extremely valuable ideas that he immediately threw into his first products—but XEROX was never serious about developing those ideas, anyway, Gladwell argued. For a while after Gladwell’s landmark retelling of the story, XEROX looked more like a winner than a loser.
Then 2018 dawned with the first guns fired in a complex, drawn-out global struggle for control of XEROX’s future, because the giant company’s prospects finally appeared to be fading. Major newspapers and business magazines began writing XEROX’s obituaries. However, as XEROX’s owners and partners wrestled for control of the company’s assets, Bloomberg Businessweek staff writer Drake Bennett summed the whole mess this way: “The course of corporate governance has never run less smooth.” At the start of 2020, XEROX’s future is punctuated with a question mark.
Although the moral at the end of this Aesop’s fable may still be up for grabs for years to come, the basic story is an essential cautionary tale about what not to do when making these first, carefully protected bets on innovation.
To be clear, XEROX never referred to its Palo Alto Research Center (PARC) as a skunkworks when it was established in 1970. But business leaders understood that the PARC had all the hallmarks of the skunkworks strategy, including the long distance between the center and the home office. On top of that, XEROX also followed a hands-off approach to letting innovators conduct whatever research they thought could prove profitable down the line. Imaging was XEROX’s game, but the researchers realized that powerful new tools were required to operate future generations of printing machines. That’s how the XEROX team happened to develop an early personal computer with the world’s first graphical user interface (GUI) that was controlled not by typing arcane commands, but by a “mouse.” Another pillar of a skunkworks was secrecy and few people outside the PARC had any idea that these researchers were successfully operating such a game-changing computer. Unfortunately, even XEROX’s board seems to have misunderstood what their team was building.
How did Steve Jobs storm the gates? In 1979, Jobs had caused enough buzz in the high-tech world that XEROX wanted to buy some shares in his fledgling company. However, Jobs’ main condition in that deal was a quirky request to personally set foot inside the PARC with a few of his colleagues. His now-famous request was that XEROX had to show and tell, before Jobs would deal on his stock. Entire chapters of books about Jobs and Apple describe the tug of war this request set off inside the skunkworks. The geniuses at the PARC knew exactly what was about to happen if this pirate got a glimpse of their best work. PARC managers were furious that their board back on the East Coast would even consider Jobs’ request.
For the chance to buy a bit of his little company, XEROX’s executives forced the skunkworks team to guide him through their wonderworks. This actually played out over a series of visits with lots of arguments and disputes along the way. In the end, however, Jobs got what he wanted. He and his colleagues were able to explore a personal computer unlike anything they had dreamed was possible. The idea of communicating with a computer through images rather than typed text? Revolutionary. And, initiating this dialogue by rolling a hand-held device and pointing? Unheard-of! Jobs and his team freely admitted, after the visit, that they swiped every idea that wasn’t nailed down.
So, where does that classic tale stand today as business school professors get ready to tell it to new crops of students? Well, XEROX’s fate remains unknown as corporate gyrations continue. We may not know the end of the XEROX story for years.
One truth remains: The whole concept of a skunkworks is secrecy combined with lots of latitude to fuel unparalleled innovation. By any measure, XEROX’s PARC proved that principle, whether or not XEROX itself benefited from all of the PARC’s world-changing developments.
When Jobs stepped through the gates of the PARC, the person charged with handing over those ideas was the groundbreaking computer scientist Adele Goldberg, whose papers now are archived at the Computer History Museum in California. She had done everything possible to prevent this visit, short of quitting the company, before XEROX officials finally forced her to welcome that brash young man.
Handing him a key to the fortress, she later said, was nothing short of “incredibly stupid and completely nuts.”
Completely Nuts
More than once when setting up our own skunkworks at Assurant Solutions, I heard I was “completely nuts”. That’s because the atmosphere needed to create new things, including new demand for products we’d never tried to produce before, runs counter to a lot of traditional business thinking. The thing is, we had already proven the success of the idea with a small division in the UK. When we undertook a similar venture Atlanta, I knew right away that we had to secure the team in an American skunkworks. I was not about to let our corporate gatekeepers slow this important work down to a crawl.
We already had our big building in Atlanta, but I did not want the innovation team there. Instead, we moved them into a little office in midtown. Then, I refused to share our address with the rest of the staff. I knew if I didn’t protect the team, the mother ship would suddenly appear out of the sky and suck the life out of all of them.
Of course, our people all had the company’s best interest at heart. Our reputation for solid business practices was very important to us. We had been successful for many years because of the care with which we researched, designed and maintained compliance on everything having to do with our policies. But, when we tried to build something new—well, the mismatch was sometimes just comical.
It was like doctors lining up to kill a cancer they had just diagnosed. The leader of the innovation office called me one day and told me that they had gotten a request from an Assurant Solutions auditor to schedule a visit.
“Well, they’re just trying to protect us,” I said, trying to reassure him.
“I understand that,” he said, “but this auditor told me how many people he’s bringing to do the audit—and that’s more people than we have working in this office!”
It got pretty ridiculous sometimes; and I did take a lot of grief for the way I ran interference for that skunkworks. This secrecy drove people in the parent company crazy. I refused to let anyone publish their address in our directories and I made it clear that our people were not supposed to just show up over there and start taking their time away from what they needed to build for us.
The result was a huge success for Assurant and the promotion of our first chief digital officer. The original little team from the skunkworks grew into a 250-person digital center of excellence.
Wisdom at a Glance
So what can you learn from these skunkworks stories? For more than incremental innovation, you need to give a team freedom from the traditional corporate structure. Often literal physical distance! At the same time, it’s unlikely that you want to support projects as wide-ranging as those at PARC. Set up your innovation team with a clear business purpose then let them run. Ideally, you’ll be able to bring ideas back into the larger business along with new capabilities and practices.
The post Skunkworks: Protecting Innovation appeared first on Craig Lemasters.
