Tuesday, January 06, 2015

Making sacrifices for innovation

A blog post by Jeff DeGraff prompted me to write this post.  His post was entitled "What are you willing to give up for Innovation", although on a closer read he's not really suggesting that you have to give up anything.  However, modern business thinking is based on winning a shrinking share of a fixed pie.  That is, most executives believe it's all a zero sum game.  If I spend resources to "do" innovation, those resources have to come from somewhere.  Therefore, I am sacrificing some other project, goal or capability in order to attempt innovation.  And this zero sum thinking, this ratio of tradeoffs, will never tip the scale in the direction of innovation.  Here's why.

If you keep doing what you are already doing and are reasonably adept at doing, you can anticipate approximately the same returns, unless a major disruption in your market happens.  If you attempt innovation, and you aren't particularly adept at innovation, you may end up with a less than satisfactory result.  Given the nature of innovation, even good innovators don't hit home runs every time.  So the equation boils down to preferring consistent singles and doubles versus the possibility of a home run or nothing.  When the game is cast in this light, the vast majority of managers will play small ball, seeking singles and doubles, over the riskier game of home runs or strikeouts, because predictability and marginal growth are rewarded over the short run, and disruption occurs only rarely in the marketplace.

Of course this model is developed with a number of assumptions.  The two most important assumptions are that 1) it's difficult to become a better player in the game and 2) the conditions and rules about the game never change.  That is, you can't improve the odds of a home run, and the playing field and the rules won't change, or will change very slowly, giving you time to react.  What if neither of these assumptions are true?

We know the first isn't true.  You can develop better innovators or hire the skills to innovate more effectively.  Whether you choose to "insource" and develop innovation skills or "outsource" innovation to trusted partners, your company can become more adept at innovation, forcing managers to be more circumspect in their singles and doubles versus home run thinking.  It turns out the second condition is also not true.  We've built organizations, corporate structures and hierarchies based on business models from the 19th Century, but the pace of change and nature of markets, consumers and competitors is evolving rapidly.  It wasn't that long ago that Border's was a Wall Street darling, but internet commerce made its business model and many other booksellers' models obsolete.  The market you compete in, the expectations of your customers and the types of competitors you face are all changing very quickly.  Playing for singles and doubles while the playing field changes may leave your team further and further behind.

The fact is that too many managers and too many business models are working on outdated premises.  These premises suggest that you have to sacrifice too much for too little gain to do innovation.  I'm here to tell you that you may need to make some small sacrifices for innovation, but it's no longer a question or when or how much, but how quickly.  It would be beside the point to argue that innovation doesn't require some sacrifice.  Any new initiative or change in corporate direction will require some sacrifice or rebalancing of resources.  Cultural inertia in places where innovation isn't a frequent activity will require the investment of personal capital and enough energy to spark momentum.  But once the skills are learned, the culture and people are aware of the importance, they will provide more energy and enthusiasm, because everyone wants to be part of something new.  You see, we managers believe that people view their jobs as a zero sum game as well - only putting in the minimum to accomplish the tasks they are assigned.

What we fail to realize is that we can call on their sense of adventure, their desire to create something new.  When people truly believe they'll have this opportunity, they'll commit more of themselves to the effort.  Thus, we believe there is a much deeper reservoir of resources and energy just waiting to be tapped, that you aren't tapping today.  You can enlarge the pie by asking for more innovation.  Once people believe you are serious, and that they can actually create new products and services that matter to themselves and customers, more time and more resources will be available, if for no other reason than your employees will want to see the ideas succeed.  Everyone wants to work for a company that is changing the world.  If all you ask people to do is to maintain the status quo, that's all they'll do.  Once you ask people to put a dent in the universe, and demonstrate that you mean it, they'll do more and do so happily.

Do you need to sacrifice something for innovation?  Yes, the first time you attempt innovation you'll be forced into tradeoffs.  But with the right communication and commitment levels,  the right cultural preparation and the right executive commitment, you can turn zero sum thinking into a situation where you begin to ask:  how much larger can we make this pie?
AddThis Social Bookmark Button
posted by Jeffrey Phillips at 5:38 AM


Post a Comment

<< Home