Innovation is the ever-current buzzword in our modern society. Many, including managers themselves, argue that companies are not working enough with innovation or optimisation and therefore ends up struggling with staggering growth and tougher competition. However, having met a lot of companies in the Scania region and studying numerous others in academia I beg to differ from this opinion. It is not the will or efforts to change that lack calibre, in fact the root cause of the problem is that managers are too eager to push innovation and therefore neglects grounding the efforts in analysis. A phenomenon I would like to call The Innovation Paradox.
- The Innovation Paradox -
In almost every organisation having a managerial role requires you to perform in line with result budgets as well as the public and the internal expectations. A balance that is hard to maintain in itself but gets even more unstable when forces from the outside keeps redesigning the playing field. You want to stay credible and assure the different stakeholders that you are a competent manager that will lead your team, division or company to success. The problem is that people are short sighted and so are both you and the stakeholders. So to live up to the expectations of a 21 st century manager you keep emphasising on the need to innovate and optimize your current business to cope with the ever-changing environment. You push your subordinates and colleagues to come up with new ways to improve the way you operate and you find it easy to fund projects that has promising outlook to do just this.
The problem is that you and your stakeholders have since long lost track of the course of direction and keep chasing potential successes in every direction, at the same time. Directions that are influenced by different best practices instead of thorough strategic thinking. This leads to a devastating amount of resources being spent on ventures that has little or no probability of success. The pressure built into organisations today promote this behaviour of short sighted gambles that often result in even more pressure and by that creating a negative spiral. What managers need to do to turn this around is to step out of the pressurized chamber and make room for evaluation, rather than creation. Managers need to set one clear and well-grounded strategy to go for.
In his article “You Need An Innovation Strategy” from 2015 the well-known management scholar Gary Pisano backs this standpoint with two decades of research within the field. What he concludes is that firms having a clear innovation strategy in line with the overall business strategy to guide their decisions outperforms those who lacks it. This result is rather intuitive since most of us can relate to the fact that focusing on few tasks increases the probability of succeeding with them. In his article “Design Thinking” from 2008 Tom Brown, another scholar in the field, further suggests an intuitive way of looking at the cost of innovation efforts. His research shows that the most power to influence the cost of an innovation venture exists in the early stages of the venture. This is since the direction can be shifted easily. However, as the venture progresses through the different stages the ability to influence the costs decrease in the same time as the actual costs increase due to reaching the implementation phases.
Managers should therefore put most emphasis in the early stages to secure that the venture is on the right path before the large costs are put in play. In reality though, as discussed earlier, what managers tend to do contradicts this intuitive perception. What is the solution then?
Drawing from Pisano and Browns research I suggest that the simple but yet so effective way to change course of the contra intuitive behaviour is to put emphasis on evaluating the innovative ideas in the early stages of the process. Managers needs to appoint time and resources for thorough analyses to base decisions on. Analyses of the market, trends, competition and internal capabilities are examples of ways to create better basis for accurate decisions. With these tools more ideas will be shut down at early stages and efforts can be focused on the ones that has better probability of succeeding in the long run. If you as a manager can grasp this simple, yet complex, idea and manage the harder task to act according to it your chances of succeeding increases drastically.
Mangers can use the metaphor of the theory behind hitting a good golf shot: You are not using all your clubs swinging away a dozen of balls to then see if someone landed close to the flag. Instead you carefully assess the length of the shot, the condition of the grass, the direction of wind and many other parameters. This to then pick the optimal club, carefully aim your stance according to the wind and test-swing beside the ball to get a feel of how hard to hit it. Finally the golfer makes a well-calculated attempt at hitting the ball according to the analysis of the different conditions and by this performing at top of his or her capability and increasing the probability of success by a tenfold.
Working with Lunicore I have realised that this is where consultants can help organisations prosper in the future. To hire a consultant to do the market research or develop and try a prototyping idea in the early stages will, to large extent, pay of greatly in the future. Furthermore, it is also a very effective way of speeding up the process so that you can take both good and fast decisions and by definition become a more dynamic organisation while beating The Innovation Paradox.
… Or to use the golf metaphor: What we sell at Lunicore is the opportunity to increase companies probability to hit hole in ones instead of landing in the rough, while making sure that they don’t run out of balls before finishing 18.