Tuesday, September 10, 2013

Why innovation must become business as usual

Lately it has been interesting watching innovation project begin in our clients.  There's really nothing new to report.  Typically what happens is that an executive becomes convinced that a market opportunity exists which must be filled, or that a competitive move must be countered.  There's a lot of discussion about the size and scope of the need or opportunity.  Then, one executive or senior leader becomes the advocate for the innovation opportunity.

After that, there's the typical work associated with any project:  building a plan, finding the right people to staff the activity, defining the scope of the work and anticipated outcomes.  Of course where innovation activities are concerned, this often means training the team to improve innovation techniques and skills and expanding the typical scope of work to include more disruptive ideas.  For every innovation project, however, there are corporate and cultural resistors.  These take the form of people who feel threatened by the scope or perhaps that the scope invades their turf.  These also take the form of people who believe their priorities should take precedence over the innovation activity, or who need the resources the innovation project is using.  These also take the form of corporate resistance to change and the fear of risk or failure, especially when targeting uncertain new needs or customer segments.

So, while an innovation project is often very similar to any other project at the macro level, it is exceptionally different from traditional projects at the micro level, and runs into much more resistance. That resistance comes from the mere fact that innovation is new and different, that the project may expand the scope of the product or service portfolio, that the outcomes are risky or uncertain, that the outcomes may cannibalize existing products, that other priorities were pushed aside to focus on innovation, and so on.  The amount of corporate fear and inertia is significant, and unless the team can overcome this resistance and inertia the innovation project faces limited potential scope or even failure from the start.

Now, compound this reality with the fact that innovation is increasingly more important, and needs to be accomplished more consistently and more frequently.  As competition increases, consumer demands increase, trade barriers fall, creating new products and services becomes ever more important.  Add to that fact that product lifecycles are decreasing, which means products must be replaced or at least reconfigured far more frequently than before.  When you add up all of the facts, it's clear that any firm must step up its innovation activity in order to remain competitive.

But we've demonstrated earlier that innovation projects face more fear and inertia than other projects and that means the projects often decrease scope or even fail to launch successfully.  In other words the cultural resistance and inertia is often limiting innovation at a time when innovation is ever more important.  What to do?

We've got to find a way to reduce corporate resistance to innovation, and remove or eliminate the inertia that many corporations retain.  While successful companies may feel secure with existing products and market share, that security is a myth.  Much of what the resistance and inertia is based on is on protecting a customer base and market share that is under constant attack.  Taking a reactive mindset and resisting change is counterproductive.  Good innovators already understand this and take the fight to the market through proactive innovation.  Good innovators don't hunker down, defend share and resist innovation.  On the contrary they attack adjacent markets and rework their products to keep competitors off guard and uncertain.

Corporate cultures have been allowed to become slow, comfortable and resistant to change.  We've got to rethink and rework corporate cultures to become more nimble, more hungry, more aggressive and open to embracing change.  As comfort levels rise and defensive mindsets creep in, inertia and resistance to change and uncertainty has permeated many firms.  The most common word in annual reports is "surprise" - too many firms are surprised by competitors, surprised by changes in their markets and competitive positions.  Rather than being surprised, these firms should create the change, introduce the innovations.

The only way I can imagine that these things happen is that corporate cultures embrace innovation as a regular, day to day occurance rather than an occasional, sporadic and problematic event.  This means the cultures must become far more comfortable with change and uncertainty, and that resistance levels fall.  Further, firms must become less celebratory and comfortable with their competitive positions.  Andy Grove became famous at Intel saying Only the paranoid survive, and he wasn't far from the truth.  Newton is right - objects at rest tend to stay at rest.  We need more, and more consistent, innovation motion to avoid inertia.  And, rather than the start and stop model we've used to date, which simply means each project faces the same inertia each time, we need a culture and capabilities that sustain innovation momentum over time.  Innovation must become business as usual, otherwise each and every innovation activity will be subject to resistance and inertia, which waste time and effort, reduce scope and threaten the success of each project.

Few firms enjoy kicking off an innovation project because they know the amount of resistance and inertia the activity will encounter.  As projects encounter the inertia, a significant amount of energy must be used to gain momentum.  Executives often aren't willing to provide the necessary energy to overcome the inertia, because that expenditure of energy comes at a cost - a funding cost, a status cost, a credibility cost.  These tangible and intangible costs matter.  We must lower these costs by reducing cultural resistance and corporate inertia, through better strategy definition, better communication, better innovation processes and outcomes.  Without consistent innovation, a corporation is basically defending a shrinking position.  The more its position shrinks, the harder it will be to consider the radical alternative, to take a new and better position.

Until and unless innovation becomes business as usual, reducing cultural resistance and removing or at least reducing corporate inertia, every innovation activity will be difficult and face unnecessary obstacles.
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posted by Jeffrey Phillips at 7:56 AM


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