A totally true tale informs us of the need for rewarding unconventional thinking:
In 1945 the Raytheon Company faced a tremendous demand for magnetron tubes, to power the new technique of radar which was used to detect enemy aircraft. One day when a Raytheon engineer named Percy L. Spencer stepped too close to a magnetron tube, he noticed that the chocolate bar in his pocket melted.
Other engineers had noticed the same thing. Thinking in a conventional manner, they sought ways to shield or insulate the unit so as to minimize this undesirable side effect: after all, radar was supposed to search for enemy aircraft, not melt food in its operators’ pockets. But Percy, despite having only a grammar-school education, had an intense curiosity and an open mind. He tried placing some popcorn kernels in front of the tube—and a few minutes later, for the first time since cave-dwellers tamed fire, human beings cooked food in a new way.
A year earlier, anyone might have laughed at the idea of Raytheon selling ovens driven by magnetrons to restaurants and (eventually) households. Absurd! Ridiculous! Guys, we’re in the defense business! But the Raytheon organization listened to Percy Spencer. He wasn’t just a resident weirdo providing comic relief—on the contrary, Percy’s input was constantly solicited, and he eventually served as a senior member of Raytheon’s board. In this case, his idea was rewarded with a shift in production, and within two years, the company took the first RadarRange(R) to the market.
History books rightly credit Percy Spencer with inventing the microwave oven. But in fact his story also includes dozens of unsung heroes, starting with members of Raytheon’s management. They’d hired and promoted Percy despite his lack of education. They didn’t chastise him for playing with his food in the middle of a serious engineering laboratory. They listened to him and built the Radarange—and then they searched within that market for new discontinuities.
Raytheon tried licensing the technology to other companies, such as Tappan Stove. (Its $3,000 refrigerator-sized microwave ovens were sold to outfits like ocean liners—gigantic commercial kitchens that had to heat a lot of food quickly.) Raytheon then tried purchasing its own domestic-appliance distributor, Amana Refrigeration, in 1965. And Raytheon continually encouraged engineers to noodle around with the magnetrons. Finally they figured out than an expensive, military-grade magnetron unit was a bit over-engineered for the task of thawing frozen steaks and popping popcorn. They developed a smaller, cheaper, simpler, safer, more reliable oven for household use.
Amana’s first countertop microwave oven sold for $495 in 1967, represented a serious discontinuity in household kitchen behavior. So Amana sent trainers to Chicago-area homes to help cook each family’s first microwave meal. Those lucky families had the trainers (and a serviceman, guaranteed to show up within an hour) on 24-hour call for a year.
Obviously these programs required Raytheon and Amana to set up some unique rewards and incentives. But the result was that Raytheon and Amana were uniquely prepared to take advantage of the huge societal discontinuities of the 1960s: urbanization, women entering the workforce, and families devoting less time to meal preparation. Again, it seems obvious in retrospect, as we consider the situation today: cheap and ubiquitous ovens, microwaveable food categories representing $75 billion in annual sales, and new retail channels of hypermarkets and warehouse clubs based on the premise of quickly thawing food. But at the time, the discontinuous mindset at Raytheon and Amana gave them long-term dominance in the home microwave oven business.
There are plenty of other examples of unconventional thinkers thriving within traditional companies: Art Fry and Spencer Silver invented the Post-it note while working at 3M, and teams at Apple, amazon.com, and General Foods invented the iPhone, Kindle, and Tang, respectively. But there are also plenty of examples of people like A.P. Giannini—mavericks and free spirits who made their fortunes as entrepreneurs because they were not rewarded in traditional organizations. To encourage a discontinuous mindset, companies must have the proper reward structure to make the mavericks’ lives fulfilling.
Even today, although many companies claim to encourage creativity and innovation, their measurement and reward systems rarely work that way. Creativity is messy. It leads to mistakes. (In Raytheon’s case, it took nearly 20 years of mistakes and “not-quite-enoughs” before the microwave’s big payout.) But measuring results, rather than effort—and rewarding certainty, rather than potential—forces out the unconventional thinkers. It promotes folks with modest aspirations, slow and plodding. Reward mediocrity and you never exceed the mediocre.