Friday, October 05, 2012

Who says innovation has to be expensive?

I'm a bit frustrated with existing management think.  We've all allowed ourselves to be sucked into the belief system of the zero-sum game.  If I take a little bit from one program to augment another, then the taking and receiving balances out.  The pie stays the same, we just cut the slices differently.  This is a static reading of strategy and outcomes - assuming that the investments now are static and to some extent the outcomes are static.  It assumes that a few dollars spent in service of innovation is a few dollars that can't be spent in other areas of the business.  When viewed from that perspective, it is always difficult to find funds for innovation.

But what about the outcome?  If I find those few dollars for innovation and the work spawns an entirely new set of products that propel the company into new markets with higher profits, isn't that a demonstration that markets and companies aren't static?  That perhaps innovation is an investment worth the risk?  Too often managers are willing to invest in what they know, comfortable with historical data rather than forecasting results.  The problem with this comfort level is that history is increasingly meaningless as the pace of change accelerates and competition multiplies.  You cannot make "safe" bets anymore.

Next, though, is the argument that innovation is "expensive" relative to other activities.  It is expensive only if the work doesn't achieve outcomes, in the same way that any activity in a business is expensive if it doesn't achieve stated goals.  The reason innovation is expensive is that it is frequently conducted in a poorly planned, ad hoc fashion by people who aren't motivated by passion but by fear.  Many innovation activities aren't launched proactively but in reaction to some market shift or some new introduction.  That means innovators often are focused on catching up to or copying a competitor rather than seizing new ground for themselves.  Innovation is very expensive when done ineffectively, without process, without tools, and by people who are frightened of both potential outcomes.  They are afraid to "fail" because that often has career limiting issues. They are also afraid to succeed, because really interesting and valuable ideas are often too strange for their executives to agree to.  So all ideas tend to clump around what seems practical and reasonable, but which has little distinction or differentiation.  Therefore, innovation doesn't produce big results, and has a high cost for little return.

This argument is a bit like complaining when you ask your teenager to invest your retirement plans for you.  He or she may choose to spend it all on a new car, or may spend a lot of time investigating alternatives only to pick the wrong ones.  When you want high returns, you embrace risk but find advisors who can help you achieve your goals.  Why don't we do the same with innovation?

Contrary to most opinion, innovation can be accomplished in very inexpensive ways, and can deliver outsized results.  We have the opinions and beliefs about innovation exactly backwards, believing that it requires a large investment and will only return small benefits.  That's not a failure of innovation as a tool or competency, it is a failure of definition, scope and engagement.  We've met the enemy of practical, valuable innovation.  It is our own conservatism, fear of risk and uncertainty, lack of tools and methods.  When you commit to innovation proactively, develop the capabilities and skills internally and engage your people and your culture, innovation is a renewable resource that delivers value far beyond its investment.
AddThis Social Bookmark Button
posted by Jeffrey Phillips at 9:19 AM


Blogger adrirode said...

I have enjoyed reading your blog and am motivated by this post. We have to show executives positive ROI, show some research with benchmarks and targets, and innovation isn't expensive - it's growth.

8:43 AM  

Post a Comment

<< Home