At its core, an effective innovation program is about balancing the absolute uncertainties of the new with the perceived certainties of the established.
Its main aim must be to identify potential value and place it within the context of what the organization ought to do right now so as to be able to capture that value in the future. Value in terms of not just money but also, to name just a few possible items, ease of recruitment of high quality people, cost reduction and ‘good karma’ of sustainable practices, lowered customer churn, and so on. Ultimately, many of those translate into ROI of money earned or saved, but it is important to not artificially limit the scope of the ideas which, we hope, will be generated.
Innovation is the natural outcome of putting the right building blocks together. Without those building blocks, it has little chance of finding traction on the inside, making it very difficult to find traction for products and services on the outside. The building blocks are the right people, the right mindspace and the right tools and spaces – both physical and virtual.
People: If you allow a group of change agents to emerge, give them training and responsibility, autonomy and challenge, you will be creating conditions for innovation to arise.
Mindspace: If you start from a position of encouraging curiosity and rewarding learning by trial and error (which some writers have termed “failearning”) you will be conditioning your people to open up their thought processes and step beyond short-term thinking, which means that innovation has the right mental background from which to arise.
Tools and spaces: If you devote some physical real estate to spaces designed to promote group creative processes, you will be building an “architecture of possibility” (more on that soon) where innovation cannot help but arise.
My estimate is that doing all these things within a period of 18 months to two years is possible and will shift your company’s collective mindset. Add to this the right tools and systems, and innovation thinking can become a natural ingredient of how you operate on a daily basis. This is the space where you want to end up – where innovating is as much a natural part of your business operations as planning and execution. Each business which wishes to still be in business by this time next decade, has to cultivate such an internal culture of innovation thinking. Adding another layer of reporting, sticking another piece of hierarchy into the org chart and calling it the Digital Department are half-measures. What is required is companywide effort.
Unfortunately, this state of being still remains something of a theory for most companies. Innovation is often enabled by technology but is rarely solely about the technology. It is about the needs of clients, the process of satisfying those needs, and the pressure to compete in order to get there quickly. It is never just about the enabling tools but rather about overcoming groupthink, reducing delaying tactics and changing ingrained habits.
The tools change constantly but the process continues, and the pressure to compete remains. This is against a background of our, human, natural tendency to seek order and simple explanations, while the world and everything in it is complex and getting more so. Combine this with the desire for smooth social interaction and for phenomena to fit into existing patterns, and we can see where groupthink can easily sneak in. Add stress to the mix, and you can almost guarantee that things will go pear-shaped. For example, stress-induced groupthink has been attributed as one of the main factors behind the 1986 Challenger disaster, with team members putting higher value on consensus than on prudent dissent.
Delaying is also seen as a rational tactic by many companies – “let’s just see how things pan out.” So is sticking to a very narrow view of what may constitute innovation. In a July 2014 article, a team of three researchers described a sobering, if unsurprising, discovery. Titled “Managers Reject Ideas Customers Want”, the article carried one key message: companies continue to turn out what they see as feasible products and services, and then wave their marketing magic wands to try and make people buy those products and services. Alas, that logic is destined for the trash heap of history. “It makes sense that companies would be attracted to feasible ideas, but we found strong evidence that they are not what customers want” said one of the researchers Jennifer Mueller. Company leaders, for good psychological reasons, like to believe that they are being innovative when, in fact, they are choosing to make achievable products and services instead. Unfortunately, this is a slippery slide towards being disrupted by competitors who perceive the playing field altogether differently and ignore all the rules. No-one is immune to this process, including the leaders. One has to wonder, for example, whether Apple’s iPhoneX is not an expensive example of a market leader believing they are innovating when in fact they are merely iterating.
Large companies are, of course, racing to acquire the right talent and the right technology. De-risking by investing at incubator stage, or acquiring tech startups while they are still relatively small are two favorite tactics. As reported by John Thornhill in the Financial Times in early 2017: “Two-thirds of Europe’s biggest companies have directly invested in a tech company as the old and new economies merge. One-third have acquired one since 2015.” Large corporations are key components of any healthy entrepreneurial ecosystem – this point that was really brought home to me in an interview I did with entrepreneur and Babson entrepreneurial practice professor Daniel Isenberg in 2016. They are the clients, the investors, and the large predators of the ecosystem. At the same time, large companies badly need small, adventurous companies to invest in, to buy, acqui-hire their people or simply license their products. They also provide training and experience for people who may leave and start their own ventures, which are ultimately acquired, closing the circle which may have begun with relatively modest early-stage investment. Although some of the investments made by established companies at early stages of development of startups are not that modest. JPMorgan Chase poured 10 million USD into LevelUp before partnering with the Boston startup to help in delivering cashless payment systems to their younger customers. (At the time of writing, twice as many US Millennials had adopted smartphone wallets as the US national average.)
Seeing innovation as either a miracle pill or attractive bunting does nothing to fix the deep lack of innovative thinking which is required in every company which was not “born digital.” Pretend innovation may “make the people feel better for a while” – I have had this very sentence said to me by a client, so I am not making this up – but it gets the company not an inch closer to actual innovation thinking. If anything, it gets it further away, since the play-acting at innovation may be actually taken for real innovation, leaving no room, or perceived need, for any actual innovation to take root. Lipstick on a pig. Digital transformation, that context which envelops all business activity now, whether business leaders are aware of it or not, is both the threat, and the opportunity which must govern how you see your business.
An excerpt from my upcoming book on creativity, empathy and agents of change – how leaders can build sustainable innovation thinking inside their organizations, by using methods and approaches drawn from the creative industries.