Friday, October 12, 2018

How much innovation energy does your bureaucracy have left?

One factor I've been considering for some time has to do with the power of a corporate bureaucracy to create or block change.  On one hand, bureaucracies are good, in that they codify practices, principles and processes and allow people to get more done quickly as a unit than they might get done alone.  Bureaucracies were created to allow people to scale concepts, inventions, products and ideas.

However, any bureaucracy comes with a certain amount of baggage.  That baggage is the inverse of the promise of the bureaucracy.  These issues are exhibited in cultures that are resistant to change, processes that become too rigid when agility is required, limits on decision making and risk taking.

In fact I think one could easily say that there are real strengths and real barriers to any bureaucracy, whether that bureaucracy is housed in a government agency - think the driver's license bureau - or a corporation.

Where this exploration of the strengths and challenges of bureaucracy becomes interesting is in the exploration of innovation.  Bureaucracy could, in some forms and fashions, improve and accelerate innovation if the bureaucracy was structured and organized to do innovation.  However, as most of us know, most bureaucracies are established to deliver the status quo in the most effective and efficient manner possible.  This means that most bureaucracies can perform some incremental innovation well, because incremental innovation is a small change to an existing product or process, which is already accepted within the bureaucracy and doesn't cause inordinate risk or change.

On the other hand, disruptive innovation by its very nature and name threatens a bureaucracy.  Disruptive innovation may break apart long-lasting processes, structures, business models and channels that the bureaucracy has spent decades building and perfecting.  This is when you will see a bureaucracy defend itself, something most do very well.

In fact I think we could establish an innovation capacity index based solely on one factor - how much effort a bureaucracy expends in merely defending the status quo.  One could consider that a bureaucracy, like any entity, must consume a certain amount of energy just to exist.  Even humans burn calories when we sleep, so a bureaucracy, a living, breathing organism, must expend some energy simply to sustain itself.

The real question is:  how much energy, of the total amount of energy available to the bureaucracy, does it spend mainly to defend its operations and existence?  The energy that is left over is the energy available to innovate or introduce change.

Think about the dichotomy of an entrepreneurial startup and a large corporation.  The startup has little structure, governance, culture to sustain - in fact it may be trying to build some.  This lack of structure can make common work more difficult, but for the most part it enables more exploration and more innovation.  On the other hand, corporations have a lot of process, structure, governance and culture, which by their nature focus and limit innovation.  The more effort given to sustaining structure and culture and the existing business model, the less energy left over for innovation, the less scope for exploration.

In short, we don't need innovation maturity models or other mechanisms to understand how much innovation capacity exists in a specific company.  All we really need to do is look at the existing bureaucracy and how much effort it expends to sustain itself, and how much energy is left over.  The more investment in the existing structure and culture, the more pride and arrogance in the culture, the more it is defended and protected, the less likely it is that innovation can occur.
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posted by Jeffrey Phillips at 7:53 AM 0 comments