The Why, What and How of Innovation.
VUCA 2.0
Volatile, Uncertain, Complex and Ambiguous are the characteristics of how many of us experience the world today. There’s no longer one answer, blueprint or solution that fits the continuously changing circumstances. How can we make sense of it? Can there be a strategy?
Why are we not addressing the systemic failures? With every major crisis, financial, humanitarian, climate, healthcare.. we seem to end up in the place of denial about it or reverting to old patterns of blame. These behavioural failures are culturally accepted symptoms of deeper organisational failures.
Every social creature on this planet is dependent for survival on its community. And we often can’t recognise our own biases and need a stranger to help us see, therapist, organisation consultant. Having done the work to recognise the organisational failures, what can we do about it?
The ants can’t swim and yet as a colony, they are able to travel for miles in the water.
Uniting together under a common goal enables a collective to acquire new properties, gain new perspectives and abilities to achieve goals utterly impossible individually. The whole is bigger than the sum of its parts. And we know the magic of it when it happens, as we have an organ for rapid development of language, we have an organ to tell us when we are not in harmony with the collective, not at the peak of our performance. We can feel it.
To me, the answer to the Why question sits in the place of purpose and self-worth, in finding value beyond immediate social validation. The purpose of doing good business becomes an infinite game of growing as an organisation, reinventing yourself and the defining sign of winning gets an entirely new meaning.
VUCA 2.0 is a term coined by Bill George calling for a new authentic leadership response (link). A balanced organisation needs a vision, understanding, courage and adaptability. More on this in my blog at blog.makingculture.co.uk.
In this article — Systems thinking and product design, I touch on the idea of the social body when envisioning balanced organisation and Cynefin framework for complex adaptive systems as an operational cheat sheet to quickly find a sense of direction.
What?
Peter Hinssen talks about the landscape of innovation in 4 simple patterns: product, market, service and model.
Are you developing and bringing to market something that no one ever built before? Inventing a unique product is not an easy thing. It requires a deep understanding of cutting edge technology in the broadest sense and an ability to make a leap of imagination into future possibilities. It takes courage to say I’m building a car when everyone around you convinced that we need a faster horse. But it's in our DNA; (think nature) discarding many mistakes while aiming for the new imperfect. Do you have it in the DNA of your organisation?
Market innovation is not about building new products but about transferring the technologies you already use to the new fields of application. Exaptation is probably the most common way of innovation in nature. Bird feathers are a classic example. Market innovation is often frowned upon: when AWS was introduced it was widely thought as a bad idea but in hindsight, Amazon clearly made the right move. How do you enable lateral thinking and cross-disciplinary conversations?
Service innovation is probably the biggest opportunity and the lowest hanging fruit. Utilising the same product in the same market but improving service delivery. Improving your relationship with your customer. Netflix has been selling video products all along but now they have a zero distance to their customers. How do you listen to yours?
Today’s success is the enemy of tomorrow’s. Uber successful Nokia, Kodak, how did they miss it? Model innovation is where you are beginning to see that fundamentally your business model is changing and if you still want to be relevant going forward, you must change. The music industry has been transformed by iTunes and Spotify, mobility as a service and car-sharing business models are disrupting the transportation market. What is your place in tomorrow’s future?
And as a Brand — where do you want to be?
This is where it usually stops. “The reason why we have large institutions is because of scalable efficiency,” - Ronald Coase (1937, Nobel Prize in Economics). But the reality of this is no longer true today. Businesses of the future scale their learning, not just their operations.
How?
“You need to have a separate environment for risk”.
The day-to-day of running a business is a lot about optimisation, making things more efficient, scaling up operation and reducing costs. And it's a closed atmosphere of protecting company secrets, NDAs, security (if you want to get into the office of a major corporate). It's a top-down approach of closely following a strategic growth plan and a multi-year development playbook. And its a very linear and structured new product design process. It's predictable and it works. If you are investing in a multi-million dollar programme you want to be predictable and know that you’d bring a good return to your shareholders.
“We don’t have a plan. We don’t know what we are going to be working on this year”, — Kevin Nolan CEO GE Appliances (talking about innovation at FirstBuild, GE Appliances Innovation Company).
Open. Experimental and Adaptive.
Entering a place outside of a comfort zone of what you know to find a new disruptive idea is risky. And it requires a different approach. Sensing for new ideas that could be the next big thing needs openness. It's not a fail-safe operation but a safe to fail environment for experimentation and trying new things. And it's constantly changing through iteration and adaptation.
“You need a wide lens for new ideas and an ability to narrow them down through experimentation”, - Peter Hinssen introduced an hourglass model combining innovation and operations. “Then it's about scaling up and running a business at scale”. But can you combine the two mindsets under the roof of one organisation? John Hagel argues that you can not.
Keeping the business going, making improvement and optimising is risk-averse. Innovation is about the low cost of failure and continuous iteration and experimentation.
“The scalable efficiency institutional model is inherently a diminishing returns model — the more efficient these institutions become, the longer and harder they will need to work to get the next increment of performance improvement. Scalable learning, on the other hand, for the first time offers the potential to shift to an increasing returns model where the more people who join together to learn faster, the more rapidly value gets created”.
To be continued…
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