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In my experience working for and consulting with mature businesses, almost all do a great deal of talking about the innovation work they are doing, with teams dedicated to the endeavor, and constant reassurance to boards and investors that new ideas are endemic to the organization. I have found that this often amounts to little more than talk, with minimal results to show success.
My conclusion is that most companies are structured to maximize efficiency and minimize risk, resulting in an environment that prevents breakthrough innovation. I have always struggled with how to help them turn this around, so I was pleased to see some excellent guidance in a recent book, “The Illusion Of Innovation,” by Elliott Parker, Founder and CEO of High Alpha Innovation.
He proposes, and I agree, to six keys for transforming any organization, large or small, into a resilient and long-term-competitive venture delivering radical innovation in today’s chaotic business world and marketplace:
1. Capitalize on the power of small teams. Small teams tend to emulate startups who can learn, change, and grow quickly without carrying the baggage of feeling compelled to propagate what has worked before. They can be incentivized to reimagine the existing world and search for exponential returns rather than produce incremental improvements.
2. Don’t be constrained by organizational hierarchies. You must learn from nature, which abhors a hierarchy. Evolution is not a planned, top-down, command-and-control kind of endeavor. Resilient organizations encourage thinking and feedback from far down in the organization, and directly from customers, leading to solutions that are innovative.
3. Experiment outside your existing industry norms. Always align incentives with objectives but foster purposeful experiments outside the traditional rules of your industry that limit thinking and action. Push experimentation out to the edges of the organization, and even beyond to work with external startups who are not afraid to play with fire.
4. Seek novelty to create new strategic directions. Don’t allow the pursuit of anomalies, or novelty, to be an aimless exercise. Move away from where you have already been and avoid making decisions by committee on which experiments to pursue or what to do with results. Choose experiments based on their ability to spawn real innovation results.
5. Let experiment failures incent new experiments. The best way to maximize returns and minimize risk is to run as many experiments as possible at the lowest cost per experiment, using a structured and learning strategy. At some point the answer may be an experiment with a large-scale acquisition, venture investment, or external partnership.
6. Use long-term thinking for competitive positioning. Long-lived healthy institutions create more than they consume. They don’t seek to maximize profitability in the short term, and they don’t pursue monopoly status. Long-term orientation is born out of a deep care for customers, desire to improve the human culture, and positively impact the world.
In any business, making this kind of change is hard, but not changing has much more dire consequences. It is difficult to steer any organization already scaled and set in its ways in a new direction. Entrenched incentives and metrics seem logical because they explain how the world seemed to work best in the past. Abandoning them feels very risky and counterintuitive.
Also, because businesses are now better managed than ever for safety, regulatory requirements, and predictability, organizations have become less capable of adapting to changing times. The solutions you are developing now for existing problems will only create new challenges that are even bigger and more complex.
It is up to you as business leaders and professionals to meet or catch up to the comparable rapid pace of change now occurring in the market and with new customer demands. We need all businesses, large and small, to be better at solving new and bigger challenges. The future is not predetermined, but we all have a role to play in its direction.
Related: Mastering Focus: 6 Keys to a Memorable Business Strategy