As our colleague Gary Hamel has observed, this kind of commitment makes every customer problem an innovation opportunity. One Schwab executive describes it this way: "Our basic philosophy is to ask, 'Who's getting screwed, where and why?' And then we go out and solve that problem."

In 1989, Charles Schwab & Co. realized that even phone conversations often served little purpose if a broker wasn't going to push products on its customers. It introduced Telebroker - automated order entry from the telephone keypad. About the same time, a middle manager pointed out that paperwork burdens to a large extent locked no-load mutual fund investors into the fund families where they'd invested. By 1992 Schwab had evolved OneSource, a center that made the management of no-load investments easy. And in 1995, when a technology team within Schwab presented a demo of what then-new World Wide Web technology could do, senior managers almost instantly recognized how the web could make life better for Schwab customers. Thus Schwab invested aggressively in the Web even before it realized it would face aggressive price-based competition from other web brokers. The result: Today it controls some 30% of all the stock trading that happens on the Web.

Spiral Staircase innovators can never tell where in their organization a transforming innovation may originate. Taiichi Ohno, the developer of the Toyota Production System, came up with the work flow innovations that were at its core seed when he was a mere machine shop supervisor in Toyota's main factory. This means the levers that managers use to spur Spiral Staircase innovation have to reach everyone. The culture of experimentation and commitment to learn can affect every part of the organization. Toyota had done that well by 1947, when Taiichi Ohno and other Toyota people were inspired by president Kiichiro somewhat overstated insistence that Toyota must: "Catch up with America in three years. Otherwise, the automobile industry of Japan will not survive."

At every level where it is possible, Spiral Staircase companies create teams with real autonomy whose charge is making life better for customers. Compared to other airlines, British Airways has made a great deal of Spiral Staircase progress. One important contributor to its successes was the decision by Sir Colin Marshall, British Airways' former chief executive, to create brand managers for each British Airways class of service.

The brand managers as a group came up with the radical idea that British Airways should design its own airplane seats - products traditionally bought off-the-shelf from Airbus or Boeing. Each focusing on particular customers, each brand manager realized that well-designed seats could make a dramatic difference for a modest investment. Moreover, because of the autonomy BA had established, the brand managers felt they could invest considerable time working with outside suppliers to develop a comprehensive program for redesigning seats before they even presented the idea to senior managers. The resulting seats differentiated BA significantly, especially in the premium classes. BA's first-class seat - created by a leading designer of yachts - provides excellent space for either sitting or sleeping.