How Microsoft Innovates: An Inside Look at the Culture Behind Some of the Biggest Breakthroughs

Contrary to popular belief, “innovation” is not synonymous with “invention.” Instead, innovation is all the hard work that comes after invention to bring that idea to life. Tech giant Microsoft has long thrived on this energetic cultivation.  Two veteran Microsoft engineers and entrepreneurs are offering a rare inside look at how one of the world’s most influential companies unlocks human creativity and collaboration. JoAnn Garbin, former director of Innovations at Microsoft and now founding partner of Regenerous Labs, and Dean Carignan, partner program manager in the Office of the Chief Scientist at Microsoft, co-authored The Insider’s Guide to Innovation at Microsoft. In a fireside chat at From Day One’s Seattle conference, they shared key lessons for anyone looking to thrive in an era defined by rapid change and innovation.The Joy of Innovation Despite living in unusual times, with the future of work seemingly powered by AI, Garbin and Carignan found throughlines about innovation that can help workers across a variety of eras and job descriptions. “We felt like there were core lessons that transcend time and technology and industry and role. It doesn’t matter if you’re in HR or in engineering or research, there are practices that everybody could benefit from,” Garbin said. One of these universal truths they discovered about innovation is team dynamics. “We discovered this incredible joy and collegiality in the teams that were innovating,” Carignan said. “And so that was our motivation: to make people better innovators so they could be productive, but also so they could be happier.” Innovation, Garbin says, is a fundamental human need. “We are builders. Since the dawn of humanity, we’ve been creating things. And up until the computer age, we were still creators and builders,” she said. But with today’s technological advances, we don’t all always get to participate in innovation in quite the same way. And whereas most businesses are “zero sum” and looking to be cost effective, Carignan says, innovators instead have a positive sum mentality in generating new and exciting things for their constituents.A Method to the Madness “Part of Microsoft’s secret sauce is that it has embraced innovation,” said moderator Cathy Duchamp, assistant managing editor at the Puget Sound Business Journal. And that innovation, the co-authors say, is “loopy.” Playing off the notion that tech creators may get pegged as “mad scientists,” they explored the loopiness of the innovation process. “There are all sorts of patterns in the innovation process itself that are iterative. You discover, you design, develop, you learn, you fail, you iterate,” Garbin said.But that’s not to say there is no structure in place. “There is a method to the madness. If there isn’t a method, you can’t teach it to people, and you can’t bring in new people and get them into the process effectively. So, you have to make it a structured, standard process,” Garbin said. Fortunately, the linear notion of work is highly familiar to those in the corporate world. HR leaders need to look for innovators who understand how to bridge the gap.“The best innovators that we found understood, ‘I’m in an environment that wants predictability and linearity. It’s my job to explain why things are going to be loopy and prepare the people I’m working with and anticipate when it might loop back and when it’s going to loop forward,’” Carignan said. “And so fitting innovation into a corporate structure, or any company structure, is hard and it requires a certain profile of person.”Building a Culture of Innovation Garbin and Carignan signed copies of their book for attendees Innovation cannot, and should not, be limited to creative or technological pursuits alone. “We found that the best innovators at Microsoft were thinking way beyond the technology,” Carignan said. “They would innovate their business model, their culture, their processes. And it’s that holistic approach to innovation that really leads to breakthroughs.” The co-authors call this systemic creativity “architectural innovation.” Carnigan shares an HR-specific example from Bing, Microsoft’s search engine. “Bing does the candidate-driven loop. They basically leave time in a recruiting loop for the candidate to reach out to people, connect, follow up, schedule a coffee, and they look at how [the candidates] use that time and whether they’re actually using it to learn, engage, and build relationships,” he said. “It’s a good indicator of whether or not they’re going to be innovative when they hire in.”Another Microsoft example: gaming arm Xbox hires for “culture adds” rather than “culture fits,” Carnigan said, acknowledging that each new hire will fundamentally change the organization’s DNA–and that’s OK. “Adding to it is way better than fitting into it,” he said. Xbox manages its culture the way it manages a product. “They say culture is something we need to proactively shape and create, so they have reviews, metrics, and targets. It's not as definable as a product, but they've invested in a team that takes it seriously and whose sole job is to think about where the culture is today and where we need to go with it,” Carnigan said.Best Practices for InnovationPeople are essential to innovation. In the innovation loop of “discover, design, develop,” the most successful organizations have people who take part in more than one part of the process. The co-authors identified different work personalities, such as pioneers, developers, settlers, and town planners. But a group’s ability to innovate is dependent, Carignan says, on another category: boundary crossers. “The discipline is different from the role,” Garbin said. “The trick is to connect all these people together.”  Failure is key to a healthy innovative process, Carignan says, citing Microsoft’s failure to jump on the search engine bandwagon fast enough, leaving room for Google to take the lead. Learning from those mistakes, the team has taken on an early adopter approach when it comes to AI, establishing themselves as leaders on the cutting edge. The co-authors also described the concept of “re-hiring the team” at Xbox when there is a major business or technological shift. “They map [the change] down to every individual job description, and managers are then charged with going and having the conversation: ‘How do the new requirements of the organization map to your interest, background, skills, and passions?’ The vast majority see this as an opportunity to learn and grow, and become even more connected to the organization because they’ve been re-hired,” Carignan said. Ultimately, we are all innovators. “Innovation is everywhere,” Duchamp said, in all departments and across all roles. “90% of the money invested in innovation goes to technology,” Garbin said. “But 90% of the value created comes from everything around the technology: the business model and the people systems. So, the companies that figure out [how] to innovate with everyone, and bring all the roles, all the disciplines, all the parts of the business together, they’re the ones that really achieve monumental success.”Katie Chambers is a freelance writer and award-winning communications executive with a lifelong commitment to supporting artists and advocating for inclusion. Her work has been seen in HuffPost and several printed essay collections, among others, and she has appeared on Cheddar News, iWomanTV, On New Jersey, and CBS New York.(Photos by Josh Larson for From Day One)