Monday, June 02, 2014

You are what you innovate

In many philosophical circles, the mantra behind much of the belief system is that you are what you (think, eat, do, believe).  In dietary circles, you are what you eat.  Is it also the case that you "are what you innovate" or is it often the other way round?  I think in many cases we actually "innovate what we already are".

The reason that most people aren't what they innovate is that it would require change in two dimensions.  To be what I innovate requires me first to be open to change from my current state.  Far too many of us as individuals and corporations are comfortable with our current states.  Note I didn't say fully satisfied, because most people and corporations aren't fully satisfied with their current states.   We all simply feel that the risks inherent in change and the uncertain outcomes aren't yet worth the work of creating change.  So first I must be willing to change.

Second, I must be willing to innovate, and innovate in areas or markets or solutions that are new and perhaps unfamiliar to me.  If I innovate only within the context I know and understand, I don't change.  I merely reinforce my knowledge and expertise in a specific area, and become an "expert" in that space.  Over time the potential space within which to work becomes very limited, and I build on an increasingly narrow base, easily disrupted as my expertise loses out to other emerging ideas.  Yet this description of constantly innovating in an exceptionally narrow base describes many innovators, and describes why we innovate what we are.

We innovate what we already are because we understand what we are.  We understand the scope and risks.  We understand the likely outcomes.  When we innovate what we already are we lower the risk of failure, and often unintentionally limit the possibility of success.  If you've heard the saying that when you have a hammer, all problems look like nails, then the same principle applies.  When we focus innovation only on what we know and what we already are, we can't help but be disappointed when the innovation results look very similar to what we already know and do.  We are constantly optimizing the hammer, looking for more and more specific nails, rather than asking the question:  is there another way to affix this to the wall?  But merely asking that question means we must embrace difference and change. 

Far too frequently, many firms will "innovate" but they limit their innovation to what they already know.  The scope for innovation is exceptionally narrow, and over time it becomes ever more narrow. This creates expertise, which is a good thing, but limits the breadth and depth of knowledge and experience, and draws the scope for the next innovation even tighter.  So, to a great extent, many firms innovate what they are, rather than are what they innovate.

For example, we worked with a firm in the life insurance business, which you may know is highly competitive and highly commoditized.  They were seeking to innovate life insurance products, but we wanted them to think more broadly about innovation beyond the product.  For example, they had decades of information about their customers.  Couldn't they leverage that information to provide new sources of insight to other businesses?  But we were told they weren't a data company, they were an insurance company.  They weren't ready to let go of expertise, history and existing business models to innovate to a new position.

In the long run, many businesses are what they innovate, to the point that they can't innovate any further without a significant shift in focus, market, business model or solution.  But are they willing to innovate what they are?
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posted by Jeffrey Phillips at 8:54 AM


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