Thursday, September 19, 2013

Innovation that's too big to fail

The banking sector in the US has a problem.  Years of consolidation have led to a few large banks, which slowly over time have expanded into non-bank-like businesses.  These banks became the center of the banking crisis just a few years ago, and spawned a new phrase "too big to fail".  The idea behind "too big to fail" meant that the bank was so entwined with other businesses, other banks and in some cases entire industries that if one of the large banks failed, that failure could spark a domino effect in the banking world, leading to significant problems out here in the "real world".  Large banks were coddled because of the threat of financial collapse.

Perhaps it's time innovators learned that lesson.  Far too often we allow our ideas to become "too small to matter" rather than too big to fail.  Here's what I mean.

Too small to matter

When executives identify the need for new "innovation"  they create a nebulous request for something new - a new product, a new service, or so on.  That request for something new is then subjected to existing corporate culture and language, which means that many teams of people refine, reform, condense and package the initial request into a project statement.  That project statement must fit within the bounds of the existing corporate framework, risk tolerance, investment models, staffing levels and so forth.  Typically, by the time the proud project team presents the project plan to the executive who requested something new, the concepts are safely limited, carefully packaged and often too small to fail.  That is, as much of the risk that can be removed has been removed, and the concept is now so carefully defined that the team can't possibly fail to deliver SOMETHING.  Whether or not they deliver anything meaningful is a secondary concern.

We accept this process for several reasons.  First, it allows teams to "do" innovation within the confines of the existing processes and frameworks.  As I've said before, only two things can happen with innovation:  either the ideas change the culture and process, or the culture and processes change the ideas.  The overwhelming percentage of ideas end up getting changed by the process.  Second, most organizations are bred on success.  They live in a constant striving stew of success.  The more we define the idea to make it "successful" in our terms, the better everyone likes it.  No one wants their name associated with a project that won't be successful, so everyone tries to ensure the idea can be successfully developed and deployed.  Whether it's a success in the marketplace is another consideration, and will happen far in the future, when many of the participants are on to other things.

When you look at your innovation pipeline and are dissatisfied with the incremental nature of the ideas, you've accepted the concept that innovation should be successful a vast majority of the time, should fit into existing frameworks.  When that happens, your ideas are too small to matter.

Too big to fail

What innovators need are bigger horizons, not smaller frameworks.  We need to define ideas that have real value propositions, that create new market segments or solve "wicked problems".  Those ideas should be so compelling that they become too important to everyone in the organization, and too valuable to compress or reduce.  We need to mimic the banking industry and create ideas that have such integrated value, such promise to the business that they become too big to fail.

The question is:  how does a company based on maximizing efficiency and minimizing risk create such sweeping ideas?  Actually the creation of such expansive ideas is easy.  What's difficult is defining an expansive scope and keeping the scope of the idea the same when so many factors within the organization will attempt to reduce the concept, chip away at the size and scope of the idea.  Too many people representing too many functions or factions have a stake in the status quo and will seek to defend their functions or turf from any new implementation or change.  The culture will reject really radical ideas like antibodies working on a virus unless someone steps in to defend the radical idea and its breadth and scope.

The only way ideas become too big to fail and remain that way is when senior executives all agree to embrace the idea and support it not just at conception, but through development and launch.  It's always been my suspicion that this was behind what Jobs did at Apple, when he drastically cut number and range of products at Apple.  When you have very few products or capabilities, they become too big and important to fail.  Everyone has a stake in the success of the limited number of big projects, and the decisions of executives and the actions of the culture become much more amenable.

Now I'm not suggesting that the only way to define and sustain really radical ideas is to drastically cut product depth and breadth, but senior executives need to understand that if they want big ideas, they have to create the conditions in which those big ideas will succeed.  While there are several ways to do that, including creating a more engaged, nimble and paranoid culture, sometimes creating ideas that are just too big to fail is the answer.
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posted by Jeffrey Phillips at 6:24 AM


Anonymous Anonymous said...

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2:53 PM  
Anonymous Anonymous said...

Wonderful post, Jeffrey -- completely agree with you. Reminds me of that oft-cited quote about academia: that the politics are so vicious because the stakes are so low!

Similarly, the amount of investment (time, money, and effort) that so many departments and individuals will pour into projects is in inverse proportion to what needs to be done to truly move the needle.

Thank you -- a stimulating read that I've tweeted from several times.

2:55 PM  

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