Monday, May 16, 2016

Innovation without change

I've been puzzling this over the last few weeks, trying to wrap my head around the importance of innovation generally and the lack of real innovation delivery specifically.  What I mean is that everyone knows that innovation is vital to growth and future success, but very few new innovations are created. The vast majority of innovation effort and outcome is expended on me-too, so what incremental innovations that don't really change the user or the market.

I think the main problem with innovation - real innovation, that is, the kind that creates disruptive new products or introduces new channels or business models - is that it requires change.  And there's little that corporate structures, cultures and executives fear more than change.  They don't like change that's thrust upon them, and they certainly don't like change that is created internally without an exceptionally good reason.  In fact one could argue that in many ways midsized and larger companies are completely conservative - using the definition that conservatives seek to conserve frameworks and ideas that currently exist and those from the past.  Depending on the type, scale and proposed innovation outcome, innovation can create a small amount of change or a significant amount of change, and we know how difficult change is, even in organizations that are ready to change.

Change introduces another dimension to this discussion:  the concept of reactive or proactive change.  Most organizations change in a reactive fashion, because they are forced to change because of external factors or competitive threats.  The best kind of change is proactive change, which can be carefully planned and implemented through a change management process.  This description should ring true for innovators as well.  In a nice bit of parallelism, innovation can be reactive or proactive.  When innovation is reactive, a company is playing "catch up" and has no choice but to innovate, working against its own cultural fears of change.  When innovation is proactive, the change that will spill over out of the innovation activities can be planned for and managed accordingly.

Note then that any innovation activity, no matter how small or large, has secondary and tertiary effects beyond simply creating a new product, service or business model.  Innovation creates change, which ripples throughout the organization, far beyond the intended customer targets.  The more the ripple effect, the more people are impacted, the greater the resistance, especially if the team is not prepared for the change.

Knowing all this innately if not expressly, most managers and executives wish for the impossible: innovation without change.  Most executives are expressly conservative (using the definition above), good at conserving the status quo and tinkering mostly at the edges.  Most innovation, however, is innately radical or disruptive, changing not simply the end product or service, but often having a much larger impact, causing teams to question the targeted segments, product portfolios and even business models.  No wonder most innovation comes from outside the conventional players in an industry.  Entrants have little regard for existing conventions or norms, and are interested in disrupting those norms for their own benefit, while incumbents seek to protect the industry and at best want to manage change slowly.

Here's the final analysis:  if your organization fears change, resist change or is slow to embrace change, anything other than incremental innovation will be difficult if not impossible.  This truism should cause most executives to lose a lot of sleep, because the future of business is far more dynamic and unpredictable than the recent past, and the pace of change is only accelerating.  The companies that will innovate the best are those that are open and willing to change.  Those that are focused on preserving the past had better have a very defensible position, or be in niche markets, because change is inevitable, and innovation will often be its ignition.

You may have some change without innovation.  You will have very little innovation without change.  Those that can change can innovate, but will still need skills, creativity, time and patience.  Those that cannot or will not change should not bother to innovate.
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posted by Jeffrey Phillips at 6:48 AM


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